Macro

Brazil: Lula comes under the spotlight.

SÃO PAULO—Brazil’s ruling party was newly buffeted on Thursday as federal prosecutors opened an investigation into former President Luiz Inácio Lula da Silva for alleged influence peddling on behalf of a Brazilian construction giant.

Officials are trying to determine whether the popular Mr. da Silva used his clout upon leaving office to convince international leaders to award contracts to Odebrecht SA, and to push Brazil’s development bank, known as BNDES, to finance those deals with subsidized loans.

Anglo American plc Production Report for the second quarter ended 30 June 2015.

Q2 2015

Q2 2014

% vs. Q2 2014

H1 2015

H1 2014

% vs. H1 2014

Iron ore – Kumba (Mt)

10.4

11.5

(9)%

22.6

22.8

(1)%

Iron ore – Minas-Rio (Mt)(1)

1.8

-

nm(2)

3.0

-

nm(2)

Export metallurgical coal (Mt)

5.3

4.8

9%

10.2

10.9

(6)%

Export thermal coal (Mt)

8.6

8.1

5%

17.3

16.0

8%

Copper (t)(3)(4)

184,500

194,400

(5)%

356,300

396,400

(10)%

Nickel (t)(5)

6,300

10,600

(41)%

13,000

19,800

(34)%

Platinum (equivalent refined) (koz)(6)

572

358

60%

1,108

715

55%

Diamonds (Mct)(7)

8.0

8.5

(6)%

15.6

16.0

(3)%

Solid Q2 2015 production performance, broadly in line with Anglo American expectations.Iron ore production from Kumba decreased by 9% to 10.4 million tonnes due to mining feedstock constraints to the plants at Sishen.Minas-Rio produced 1.8 million tonnes (wet basis) of iron ore, a 55% increase compared to Q1 2015, reflecting the ongoing ramp up of the operation.Export metallurgical coal production increased by 9% to 5.3 million tonnes with higher production from Moranbah, due to a longwall move in Q2 2014, and development coal from the Grosvenor project.Export thermal coal production increased by 5% to 8.6 million tonnes, primarily due to higher production in Australia largely the result of a change in mix.Copper production decreased by 5% to 184,500 tonnes, as expected and mainly due to the temporary shutdowns of the processing plants at Los Bronces to manage water reserve levels and plant stability issues at Collahuasi.Nickel production decreased by 41% to 6,300 tonnes as expected, due to the planned Barro Alto furnace rebuilds.Equivalent refined platinum production increased by 60% to 572,000 ounces benefitting from reduced industrial stoppages compared to 2014.Diamond production decreased by 6% to 8.0 million carats, mainly due to lower grades and reduced plant availability at Orapa. In addition, operational flexibility at the Venetia and Jwaneng tailings treatment plants was utilised to reduce production marginally, in response to softer trading conditions.

China's economy is all about one thing right now

China reported an impressive second quarter on Wednesday. The June quarter gross domestic product (GDP) came in at 7%, beating the median forecast for 6.9%.

While the Chinese economy has been decelerating in recent years, it's not too hard to see why China's most recent quarter was hotter than expected.

Bloomberg's chief Asia economist Tom Orlik points out that the recent boom in the Chinese stock market boosted the financial sector, and caused it to grow at more than twice the growth rate of the whole economy.

The sector may have added a whopping 0.5 percentage point to the GDP print, according to Orlik.

"The good news is that helped offset weakness elsewhere in the economy," Orlik wrote in a note Wednesday. "Real estate managed an expansion of just 3.3 percent and transport and logistics grew just 4.9 percent. The bad news is that, with the increase in financial sector output tied to surging equity market valuations and turnover, it will be tough to sustain in the face of the market correction."

Year-to-date, the Shanghai Composite Index is up 18%, despite a correction that started mid-June and plunged the market by 30% in about one month.

A growing financial sector creates more job opportunities, and so that's a plus.

But, with such a fragile economy and stock market, China cannot depend on its financial sector to prop its growth numbers so that they continue hitting the 7% target.

Anglo American plans up to $4 bln first-half writeoff. Dividend?

Global mining company Anglo American expects to take a writeoff of between $3 billion and $4 billion in its first-half results because of the slide in prices for iron ore and coal, it said on Thursday.

This comes on top of a $3.9 billion writedown Anglo took in February, also due to the rout on commodity markets, when it also posted a 25 percent drop in underlying operating profit for 2014.

The London-listed company has been fighting the impact of a slide in metals prices by trying to improve its mining operations and selling less profitable assets.

"Anglo American expects to record non-cash impairments within special items ... relating to Minas Rio and certain Australian coal assets of approximately $3 billion to $4 billion on a post-tax basis," it said in its second-quarter production report.

Minas Rio is Anglo's newly launched iron ore operation in Brazil, which has been ramping up.

The price of iron ore .IO62-CNI=SI, Anglo's most profitable product last year, has nearly halved over the past 12 months, weighed down by a glut of supply.

Anglo said it decided to take the writedown after further weakness in bulk commodity prices, especially iron ore and coal used to make steel, prompted a reassessment.

"Anglo American has therefore reviewed its near- and longer-term commodity price assumptions at the mid-year, while also noting the gradual and ongoing reduction of consensus prices within what remains a wide range of forecasts."

Anglo, the fifth-biggest diversified mining group by market capitalisation, also said iron ore output at Kumba in South Africa fell by 9 percent in the second quarter year-on-year to 10.4 million tonnes due to mining feedstock issues.

Minas Rio produced 1.8 million tonnes from April to June.

Copper production in the second quarter fell by 5 percent, mainly due to production issues in Chile - temporary shutdowns of the processing plants at Los Bronces to manage water reserve levels and plant stability issues at Collahuasi.

Diamond output fell 6 percent at Anglo's subsidiary De Beers, which last year became the second-largest earner for the company.

Iron ore, diamond and copper last year accounted for 40 percent, 28 percent and 24 percent of its operating profit respectively.

Global miner Anglo American may have to cut its dividend soon as current commodity prices seem to be leaving management little choice but to focus on balance-sheet preservation in order to navigate a sustained downturn.

The decision, likely to be announced while publishing its first-half results at the end of the month, would be the first time since 2009 that the miner has to cut dividends, Bloombergreports.

"The picture as currently presented is not sustainable. Something has got to give: either commodities prices come up or they'll have to cut investment, jobs or their dividend," a banking source told Reuters earlier this month.

China Jun thermal power output down 5.8pct YoY

Electricity output from China’s thermal power plants – mainly coal-fired – dropped 5.8% year on year and down 2.4% from May to 336.3 TWh in June, showed data from the National Bureau of Statistics (NBS) on July 15.

Thermal power generation was negatively impacted by persisting weak industrial demand and abundant hydropower output amid rainy season, which rose 16.4% year on year and surged 34.0% on month to 102.8 TWh in June.

Total electricity output in China stood at 474.5 TWh in June, edging up 0.5% from a year ago and up 4.0% month on month – the second consecutive month-on-month increase, the NBS data showed. That equates to daily power output of 15.82 TWh on average, up 0.5% on year and gaining 7.5% from May.

During the first half of the year, China produced a total 2,709.1 TWh of electricity, up 0.6% year on year, with thermal power dropping 3.2% on year to 2,087.9 TWh while hydropower output increasing 13.3% to 423.4 TWh.

Attached Files

SKF sees slower demand as Europe weighs, hitting shares

Sweden's SKF, the world's largest bearings maker, said it saw demand softening in the third quarter because of sluggish industrial production and weakness in Europe, sending a chill through the manufacturing sector.

After reporting quarterly core earnings that fell short of market expectations, SKF shares tumbled 7 percent by 0830 GMT. Its subdued outlook also weighed on manufacturing stocks such as Sandvik and Trelleborg.

SKF, one of the first European companies to report its quarterly results, is viewed as a manufacturing bellwether. Its bearings are found in products ranging from skateboards to wind turbines.

The company said it would start an improvement programme for its automotive unit, which has lagged in profitability for years, but said it would remain part of the group, dousing speculation it could be sold.

"Demand is not there and the outlook is a disappointment," Handelsbanken Capital Markets analyst Peder Frolen said.

"Regarding automotive this is an internal thing where they will cut costs and review the product portfolio, but I don't think the market will be convinced that they will manage to turn it around."

CEO Alrik Danielson said weakness in demand in Europe partly reflected many companies' slower exports of products using SKF components to emerging markets.

"As we enter the third quarter we experience a relatively weak industrial production in many parts of the world, especially in heavy industry, in agriculture, oil and gas, and in some areas industry in general," he said on a conference call.

BHP Expects $2B Impairment Charge After U.S. Assets Review

BHP Expects $2B Impairment Charge After U.S. Assets Review

The pain keeps adding up for BHP Billiton Ltd. and its investments in U.S. shale gas and oil.

The company today said it would take a $2.8 billion writedown, most of it on the Hawkville field in Texas. That brings BHP’s pretax charges on its U.S. shale unit to about $5.9 billion since 2012, according to company filings.

BHP, the biggest overseas investor in U.S. oil and gas pumped out of shale rock, has said it will focus on its so-called four business pillars -- the highest earning petroleum, iron ore, copper and coal units.

“This is not only disappointing, it poses the question of whether or not those four pillars are the right ones,” Evan Lucas, a markets strategist in Melbourne at IG Ltd. said by phone. “All four of them are under huge price pressure.”

“While the impairment of the Hawkville is disappointing, it does not reflect the quality of our broader onshore U.S. business,” BHP’s Petroleum President Tim Cutt, said in a statement today. The expected writedown equates to about $2 billion after tax, BHP said.

The producer expects its U.S. onshore division to be cash flow positive in the year through June 2016 with an oil price of $60 a barrel and a benchmark U.S. gas price of $3 per thousand standard cubic feet, the statement said.

Gas Drop

BHP got the Hawkville field as part of its acquisition of Petrohawk Energy Corp. in 2011. Some of today’s charge is a write off on goodwill from the $12.1 billion takeover, according to the Melbourne-based company. It didn’t give a breakdown.

U.S. natural gas has dropped almost a third since the start of 2014 after four years of record supply as hydraulic fracturing opened up shale reserves from Texas to North Dakota.

Futures for August delivery on the New York Mercantile Exchange were little changed at $2.839 per million British thermal units at 1 p.m. Singapore time on Wednesday.

BHP will cut spending on its U.S. onshore unit to $1.5 billion in the year through June 2016, supporting a development program of 10 operated rigs, it said today. The producer spent $3.4 billion on drilling and development in the previous year, BHP said in May.

The producer booked a charge of $2.8 billion against the Fayetteville shale gas operation in the 2012 fiscal year and a $266 million writedown on its Permian basin assets in the following year.

BHP in February halted plans to sell Fayetteville in Arkansas as it couldn’t get an acceptable price, Chief Executive Officer Andrew Mackenzie said at the time.

China surprises economists with GDP rise of 7%

China has confounded expectations that its economic growth would slow further in the second quarter, with gross domestic product rising by 7%.

Analysts had widely predicted that economic growth would dip from 7% in the first quarter to around 6.8% in the second.

However, GDP held steady, officials from China’s National Bureau of Statistics claimed on Wednesday morning. The figure still represents the lowest level of growth since the 2009 global financial crisis but is in line with Beijing’s official target for 2015 of “around 7%”.

“The national economy has been running within proper range and the major indicators picking up steadily, showing moderate but stable and sound momentum of development,” China’s National Bureau of Statistics said in a statement.

The announcement of stable second quarter growth surprised analysts, offered a boost to Beijing’s attempts to soften the country’s economic slowdown and came after weeks of chaos in the Chinese stock market which saw more than $3tn wiped off shares.

However, there were immediate doubts over the growth figure’s reliability with the announcement sparking renewed debate over the trustworthiness of Beijing’s statistics.

The fact that the figure was exactly in line with the Communist party’s 2015 full-year growth target “raises suspicions,” said Yang. “There is the issue of credibility, certainly.”

China’s premier, Li Keqiang, tried to put a brave face on the recent stock market collapse during a meeting on Friday with economists and business leaders in Beijing.

Under that “new normal” Beijing is looking to boost domestic consumption as it attempts to move away from its export-fuelled boom.

Attached Files

Solar eats Gas.

Consol begins new round of layoffs

Against the backdrop of low energy prices, Consol Energy Inc.has commenced a new round of layoffs.

"We continually evaluate our workforce based on current and anticipated activity levels. These are very difficult but prudent decisions given the depressed nature of commodity prices. We are taking aggressive action so that Consol can continue to operate from a position of strength through the downturn and quickly capitalize on the up cycle when it occurs," it said in a statement.

Employees had begun to learn the news earlier in the day, sources said, but it is unclear at the moment how many are affected by the decision.

The layoffs are the latest in a series of cost-cutting moves. In April, the company laid off about 5 percent of its workforce, a move that affected upwards of 190 people. Consol at the time cited weak coal and gas prices.

Then in May, Consol said it was reducing shifts at its three Pennsylvania longwall mines — the Harvey, Bailey and Enlow Fork locations — moving to a four-day work week. And last month, the company told retirees it had decided to cancel their health insurance benefits four years earlier than it had planned on account of the poor commodities markets.

Consol earlier had agreed it would end the benefits for current retirees in 2019; however, that date has been moved up to the end of this year.

Attached Files

Iraq’s Kurds bypass state oil marketer for all July oil exports

Iraqi Kurds are independently selling oil produced in their region, bypassing the country’s state crude marketer for all exports so far this month, said Safeen Dizayee, a spokesman for the Kurdistan Regional Government.

Oil fields in the semi-autonomous region of northern Iraq are producing about 700,000 barrels of oil a day, Dizayee said Monday in a telephone interview from the city of Erbil. The Kurdish enclave is exporting as much as 600,000 barrels of that amount daily, and it hasn’t sold oil via Iraq’s state marketing agency since June, he said.

“We have the right to resort to any way to provide funds to pay civil servants,” Dizayee said. The KRG needs $1 billion each month to pay for salaries and its operational budget, and it’s financing a war against Islamic State militants that has displaced 1.7 million refugees to the Kurdish region. The KRG also owes money to oil companies.

The KRG and the central government agreed on Dec. 2 that Iraq’s state-run marketer SOMO would be responsible for the sale of all crude produced in the country. The Kurds have complained they haven’t received their full share of revenue from the sales, while the central government in Baghdad says the Kurds haven’t delivered the agreed amounts of oil. Failure of the two sides to settle differences over how to share oil revenue adds to uncertainty about supplies from northern Iraq.

“All oil sales that happen outside SOMO are illegal,” Laith Al-Shaher, director general of the legal department at the oil ministry in Baghdad, said in a phone interview Sunday.

The Kurdish region’s parliament approved a plan to sell as much as $5 billion in bonds to raise funds for infrastructure projects. There is a “clear and good desire by international financial institutions” for a sale, Dizayee said. The KRG may sell as much as $2 billion in a first round, he said.

Brazil police target politicians in new round of Petrobras probe

Brazilian police carried out their first search and seizure operations involving politicians suspected of taking bribes in a scandal involving state-run oil firm Petrobras on Tuesday, local media and prosecutors said.

Senators Fernando Collor de Mello and Ciro Nogueira are among the names being investigated in the 16th round of the probe, dubbed "Politeia", TV Globo and newspaper O Estado de S. Paulo said.

A total of 53 search and seizure operations were carried out in order to prevent evidence from being destroyed, according to statements from the police and federal prosecutors.

The Globo television network said police conducted a search at one its local affiliates, TV Gazeta, where Collor is a main stakeholder.

In statements, Brazil's federal police and prosecutors did not confirm the names under investigation but said the operations were ordered by the Supreme Court, Brazil's highest judiciary authority and the only one allowed to order probes on sitting politicians.

"The search operations are taking place in residences, offices, company headquarters, law firms and public institutions," police said in the statement.

Previous arrest and search warrants have been ordered by a federal court in Curitiba.

Since March of last year the so-called "Car Wash" investigation has landed former Petrobras executives and some of Brazil's most powerful construction tycoons behind bars. More than 50 sitting politicians, including the presidents of both Congress houses, are under investigation.

The massive kickback scandal has paralyzed infrastructure plans of Petroleo Brasileiro SA, as Petrobras is formally known, and undermined President Dilma Rousseff's political standing just as the economy tumbled.

The police statement said Tuesday's operations were taking place in seven states: Bahia, Pernambuco, Alagoas, Santa Catarina, Rio de Janeiro, Sao Paulo and the Federal District.

Efforts to contact Nogueira and Collor de Mello, a former Brazilian president impeached in 1992, were unsuccessful.

Iran’s Return From Exile Poses Fresh Challenge for U.S., Allies

Iran is back. Its agreement with world powers to curb its nuclear program will ease its isolation as an international pariah and let the oil-rich nation resume participation in global commerce.

That prospect presents new challenges to U.S. President Barack Obama’s administration, which pursued the nuclear accord while vowing not to ease pressure on the Islamic Republic as a supporter and bankroller of international terrorism.

The chance that the nuclear deal will become a historical inflection point in Iran’s relations with the U.S. and other nations depends first on whether Iran honors the nuclear agreement and then what choices it makes once it’s able to return to global oil markets and the international financial system after years of isolation, according to U.S. Iran-watchers.

While relief will be phased in over months to come after Iran meets its obligations under the accord, it stands to gain access to as much as $150 billion in frozen assets and to be freed from sanctions that reduced its crude exports by more than half. Banks including Goldman Sachs Group Inc. and Barclays Plc estimated before the deal that it would take six to 12 months for the holder of the world’s fourth-largest crude reserves to revive production by about 500,000 barrels a day after sanctions are lifted.

Obama and others have expressed hope that Iran’s reintegration into the global economy will strengthen its middle class and young people and ultimately temper their government’s support for terrorism and subversion.

“I don’t think the deal itself will lead to a fundamental transformation of Iran itself, but I think it could be a first step,” said Alireza Nader, a senior international analyst at the Rand Corp.

The deal is likely to provide a major political boost to Iranian President Hassan Rouhani, a relative moderate, and will help set in motion economic changes that could lead to eventual political reforms, Nader said.

Others say the billions of dollars flowing in over time will only underwrite the ambitions of Iranian’s hard-liners to be the dominant power in the Persian Gulf and the wider Middle East.

“We must all bear in mind that Iran is not a status quo power,” James Jeffrey, a former U.S. ambassador to Iraq, told the Senate Foreign Relations Committee last month. He said Iran is determined to assert its influence in the region and won’t play by the rules.

The nuclear talks have rattled America’s allies in Israel and the Persian Gulf, in part because there’s no longer a Sunni Arab counterweight to a reinvigorated Shiite Persian Iran. Egypt is consumed by internal problems; Saudi Arabia has been unable to quell an uprising in neighboring Yemen; and Iraq is struggling to combat Islamic State with support from Iran’s Islamic Revolutionary Guard Corps.

Doubters such as Israel and Saudi Arabia view Iran as a hegemonic power and have been adamant in opposing a deal that would lift sanctions. In the U.S., some lawmakers have expressed skepticism or preemptive opposition to the deal, which must be reviewed by Congress before Obama can take action to ease U.S. sanctions against Iran.

Here Is The Flashing Red Light In The Inventory-Sales Ratio

Recession watchers stay tuned...Wholesale Sales rose a mere 0.3% MoM (missing expectations of a 0.9% rise) but sales tumbled 3.4% YoY - the most since the financial crisis. Hopers will look at the rise in inventories (+0.8% MoM vs +0.3% exp.) as GDP positive but at some point the hope for a sales pick up fades and inventory stuffing stops(Sales -3.4% YoY, Inventories +5.0% YoY). But what should be worrying everyone right now is the inventory-to-sales ratio holding at recession levels.

And guess where inventories are soaring the most...

Here's why this matters so much, as we explained previously...

Despite 22 years of correlations (and obvious causations), asset-gatherers and commission-takers still think this time is different and channel-stuffing and 'if we build it, they will come' inventory overbuilds will be bought away in a swarm of fresh faced crappy creditworthiness consumers... not this time - as peak debt is now upon us.

Thai energy firm PTT expands into fast food to boost non-oil revenue

PTT plans to invest 1.5 billion baht ($44.2 million) to open at least 70 Texas Chicken branches over the next five years, Buranin Rattanasombat, executive vice-president for PTT's retail marketing, told reporters on Friday, with the first restaurant due to open in November.

The franchise is PTT's first major investment into Thailand's 30 billion baht ($884 million) fast food market: the company currently operates coffee shops under the Cafe Amazon and Daddy Dough local brands.

PTT plans to sign more food franchise deals in a bid to make non-oil businesses contribute about half of its overall profit over the next five years from just 20 percent now, Chief Operating Officer Sarun Rungkasiri added.

Texas Chicken will compete with KFC Thailand, which is operated by U.S. firm Yum Brands Inc. Last month, KFC Thailand, which notches the highest sales among fast food fried chicken restaurants, said it planned to boost the number of its branches in to 800 by 2020 from 532 at end-April.

Oil and Gas

ConocoPhillips to scale back deep-water exploration and Gulf of Mexico programs

ConocoPhillips said Thursday it would cut spending on its Gulf of Mexico and deep-water exploration programs, as the driller continues to tighten its belt amid lower prices.

Houston-based ConocoPhillips has already trimmed its 2015-2017 capital spending program from an initial $16 billion to about $11.5 billion per year after crude oil prices fell last year. Of that $11.5 billion, less than $1.8 billion was dedicated to exploration.

ConocoPhillips spokesman Daren Beaudo said in an emailed statement the company wasn’t detailing the magnitude of the cut to its deep-water spending at this time, or the number of layoffs that may accompany it. ConocoPhillips reports is second-quarter 2015 earnings on July 30.

The company did say it had terminated a three-year drilling contract with the Ensco Plc DS-9 deep-water drill ship, which was scheduled to begin drilling in the Gulf in late 2015.

The move will require ConocoPhillips to pay Ensco monthly termination fees equal to the about $550,000-per-day operating rate for two years, according to a statement from Ensco. Those fees could be reduced if Ensco is able to re-contract the rig within that time period.

“Our decision to reduce spending in deepwater will further increase our capital flexibility and reduce expenses without impacting our growth targets,” said ConocoPhillips CEO and Chairman Ryan Lance, in a written statement. “This strengthens our ability to achieve cash flow neutrality in 2017 even if lower commodity prices persist.”

Attached Files

Oil price drop hits Santos’ revenue

Australian LNG player Santos posted revenue of $786 million, 19% down on the $974 million in the corresponding quarter in 2014.

Santos recorded higher second quarter production and higher sales volumes, as well as significant reductions to both capital and operating expenditure.

Second quarter production of 14.3 million barrels of oil equivalent and sales volumes of 15.7 mmboe were 12% and 4% higher than the corresponding quarter, the company said in a statement.

Sales revenue were affected by the lower realised oil price, partially offset by higher domestic gas prices and a weaker Australian dollar.

Santos Managing Director and Chief Executive Officer David Knox said, “Year to date capital expenditure is 53% below 2014 levels and our production costs for the first half are tracking below guidance at A$14.0 per boe.”

He added that the company’s flagship GLNG project is progressing well as it moves toward first LNG around the end of the third quarter. All upstream facilities are commissioned and fully operational.

Santos reported that sales gas, ethane and sales gas to LNG production of 65.2 petajoules for the quarter was 17% higher than the corresponding quarter, reflecting a full quarter of PNG LNG production and increased Cooper production.

Total sales gas, ethane and LNG sales revenue increased 15% to $409 million for the quarter due to higher LNG volumes and higher domestic gas prices. The reduction in LNG sales revenues compared to the previous quarter reflects the 3-4 month lag to the oil price in LNG contracts.

First Iranian ship storing oil sails for Asia after nuclear deal

First Iranian ship storing oil sails for Asia after nuclear deal

An Iranian supertanker with two million barrels of oil is heading to Asia after sitting in Iranian waters for months, the first vessel storing crude offshore to sail after a nuclear deal this week, data showed on Thursday.

Iran and six major world powers reached a landmark nuclear deal on Tuesday, clearing the way for an easing of international sanctions on Tehran and higher oil exports.

While oil analysts do not expect Iran to make a major return to the market until next year, it has been parking millions of barrels of oil on tankers for months.

The fully laden Starla, operated by Iran's top tanker group NITC, had been used for floating storage since Dec. 12, a tanker tracking source said.

"This is the first tanker to come off floating storage," the source said. "One of the scenarios is it could do an STS operation, although nothing is known at the moment," the source said, referring to ship-to-ship transfers of oil between two vessels, usually at sea.

ThomsonReuters Eikon shipping data showed the vessel sailing through the Gulf of Oman with a Singapore destination. Earlier this week the Starla was idling offshore the United Arab Emirates in an area known as Khor Fakkan, often used for STS.

It is unclear whether the estimated 2 million-barrel cargo had been sold, or if so whether the deal occurred after this week's agreement. But it is a milestone following a months-long build-up of idling crude tankers holding up to 50 million barrels of oil, equal to over a month's worth of Iran's exports.

Iran is "likely assuming that either a small increase in exports will not undermine the historic accord reached, or, that no one would notice," analysts at Macquarie wrote in a research note. However, if an increase in exports is sustained it will "weigh on near term balances."

Iran's Oil Minister Bijan Zanganeh said last month the country was aiming to add 500,000 barrels per day (bpd) to production within two months of Western sanctions being eased, and as much as 1 million bpd in six to seven months.

The sanctions have halved Iran's shipments to as little as 1 million bpd.

Years of under investment mean Iran may struggle to get its oil industry anywhere near full potential, analysts say. It will also take time to raise output while nuclear inspectors verify Iran's compliance with the terms of the deal, and sanctions are slowly removed.

Last month, tanker tracking sources said Iran was storing as much as 40 million barrels of oil, mostly crude, on board tankers at its anchorages, which could flood the oil market.

Windward, a Tel Aviv operated maritime data and analytics company, estimated this week that Iran was storing 51.4 million barrels of crude and condensate on 28 vessels at sea.

ThomsonReuters Research and Forecasts freight analysts put the figure slightly lower at up to 41 million barrels, according to a report last week.

Attached Files

Petrobras agrees to pay Brazil $508 mln to settle tax dispute

Brazil's state-run oil company Petroleo Brasileiro SA said late Thursday it paid 1.6 billion reais ($508 million) to settle part of a tax dispute with Brazilian authorities and will take the charge against second-quarter earnings.

The charge includes 1.2 billion reais in back taxes and 400 million reais in fines, the company, known as Petrobras, said in a statement.

The payment comes after Brazil's CARF, a body within the Finance Ministry that hears appeals on tax disputes, ruled against the oil company on a dispute concerning taxes related to Petrobras' foreign subsidiaries in 2008.

The dispute dates back to 2012 but Petrobras said in a statement that it was necessary to make the payment now prevent the assessment from increasing as well as legal provisions such as a ban on importing oil.

Petrobras, which had not made provisions for the tax payment, is currently revamping the way it accounts for tax liabilities on the behest of new chief executive and former banker Aldemir Bendine, according to recent media reports.

Schlumberger, which provides drilling technology and equipment to oil and gas companies, now expects exploration and production investment in North America to fall by more than 35 percent.

The company in April forecast North American E&P spending to drop more than 30 percent.

"We believe that the North American rig count may now be touching the bottom, and that a slow increase in both land drilling and completion activity could occur in the second half of the year," Chief Executive Paal Kibsgaard said in a statement.

According to weekly data published by Baker Hughes Inc last week, U.S. energy firms added five oil rigs, the second straight week of increases and a sign drillers were ready to return to the well pad.

"We do see some activity improvement (in North America) although we do think that activity improvement will be limited," Evercore ISI analyst James West said.

"I think if we saw oil prices at $65-$70 per barrel brent, then we would see some type of improvement in activity particularly in North America and likely some stabilisation in the international markets, which should lead to an improvement in activity next year," West said.

Brent oil closed at $57.50 per barrel on Thursday.

Schlumberger, which is less exposed to North America than rivals Baker Hughes and Halliburton Co, said revenue from the region fell nearly 39 percent in the second quarter.

Revenue from the international business, which accounts for two-thirds of total revenue, fell 19 percent.

Cost of revenue fell 23 percent to $7.12 billion in the quarter ended June 30, from a year earlier.

The company earned 88 cents per share, handily beating the average analyst estimate of 79 cents per share, according to Thomson Reuters I/B/E/S.

Schlumberger under CEO Kibsgaard has cut 20,000 jobs in 2015 and scaled back spending in response to weak crude prices.

Shares of Schlumberger rose 1.3 percent to $85 in extended trading.

Through Thursday's close of $83.89, Schlumberger's shares had fallen 1.7 percent this year, compared with a nearly 8 percent fall in the Dow Jones U.S. oil equipment and services companies index.

Antero Resources Announces solid Second Quarter 2015 Operations

-Average net daily gas equivalent production was 1,484 MMcfe/d, a 67% increase over the prior year quarter and flat quarter over quarter-Average net daily liquids production (C3+) was 45,900 Bbl/d, a 127% increase over the prior year quarter and a 15% increase sequentially-Realized natural gas price after hedging averaged $3.86 per Mcf, a $1.22positive differential to NymexRealized C3+ NGL price after hedging averaged $19.51 per barrel (34% of WTI)-Realized natural gas equivalent price including NGLs, oil and hedges averaged$3.85 per McfePlanning to spud Antero's first Utica Shale well in West Virginia in the third quarter of 2015-Completed bolt-on acquisition of approximately 4,400 net acres with both Marcellus Shale and Utica Shale potential-Preliminary net production growth target of 25% to 30% in 2016

Operating Update

All operational figures are as of the date of this release unless otherwise noted.

Antero's net daily production for the second quarter of 2015 averaged 1,484 MMcfe/d, including 45,900 Bbl/d of liquids (19% liquids). Second quarter 2015 production represents an organic production growth rate of 67% from the second quarter of 2014 and was approximately the same as the first quarter of 2015. Liquids production for the second quarter of 2015 represents an organic production growth rate of 127% and 15% from the second quarter of 2014 and first quarter of 2015, respectively.

Commenting on second quarter 2015 production and expectations for the remainder of the year, as well as the 2016 outlook, Paul Rady, Chairman of the Board and CEO, said, "We had an outstanding quarter operationally, once again beating our production estimates. As we look ahead to the second half of 2015, we expect to see a slight decrease in production during the third quarter, but expect a ramp up in completions and production during the fourth quarter as we head into 2016. Driven by our expected fourth quarter operational momentum and the expected completion of the 50 Marcellus deferred completions in the first half of 2016, we are preliminarily targeting 2016 production growth of 25% to 30%.

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Oil up on UK oilfield outage

Britain's Buzzard oilfield, the most important source of crude oil underpinning the global benchmark Brent, was closed after power supplies failed, traders said.

It normally pumps 170,000 to 180,000 barrels per day (bpd) but went down in the early hours of Thursday, traders said.

A spokeswoman for Buzzard operator Nexen, a unit of China's CNOOC, declined to comment.

"There was a trip last night," said one crude oil trader, who declined to be identified.

Buzzard is the single biggest contributor to the Forties crude stream, one of four crude grades underpinning the price of over-the-counter Brent, which is linked to Brent futures.

Brent's front-month August futures contract, due to expire later on Thursday, moved to a premium of 30 cents a barrel above the September contract on the Buzzard news, its highest premium for more than two months.

Shell expects oil price recovery to take several years

Royal Dutch Shell expects oil prices to recover gradually over the next five years, with progress slowed by persistent global oversupply and receding Chinese demand growth.

The Anglo-Dutch energy giant is betting on crude rising to $90 a barrel by 2020, a key assumption in its move to buy rival BG Group for $70 billion to help transform it into a leading player in the costly deepwater oil production and liquefied natural gas (LNG) markets.

"We are not banking on an oil price recovery overnight. It will take several years but we do believe fundamentals will return," Andy Brown, Shell's upstream international director, who oversees the company's oil and gas production outside North America, told Reuters in an interview.

"Until such time, we, like other companies, will have to make sure we stay robust," he said, referring to deep spending cuts taken by oil companies in recent months in the face of a near-halving of oil prices since June last year.

A rise in global supplies, mainly due to a sharp increase in output from U.S. shale, has weighed on oil prices.

In the nearer term, Shell expects Brent crude oil to show only a modest recovery from today's $58 a barrel, with 2016 prices forecast to average $67 a barrel and $75 a barrel in 2017, based on the company's BG offer.

The world's top crude oil exporter Saudi Arabia has turned itself into a major power of refined fuels, offering customers millions of barrels of diesel and potentially triggering a price war with Asian competitors as its exports feed into a glut.

Saudi Arabia, a leading member in the Organization of Petroleum Exporting Countries (OPEC), already pledged last November to keep crude output high to defend its market share against higher-cost producers.

While the strategy has kept crude markets well-supplied and prices low, the Kingdom has seen mixed success in defending its market share as global production remains high despite low prices.

Saudi Arabia is now processing more of its crude at home as its massive refineries turn it into the world's fourth-largest refiner, in a tie with Royal Dutch Shell, that allows the Kingdom to export more fuel products than ever before.

Aramco Trading Co, a subsidiary of state oil giant Saudi Aramco, offered via tenders 2.8 million barrels of ultra low sulphur diesel for loading in late July to early August, trade sources said, enough to meet Japanese demand for three-and-a-half days.

"We are already seeing the impact in the Asia-Pacific," said Suresh Sivanandam, principal analyst for refining and chemicals at Wood Mackenzie.

"This year there is not a single drop of diesel exported from Singapore to the Middle East," he added, referring to a once popular diesel export route.

The ramp-up mainly of ultra low sulphur diesel to Europe sees the Saudis compete head on with big Asian diesel exporters India and South Korea and reduces Asia's gasoil margin to the lowest in five years.

The flurry of shipping activity out of Yanbu has also pushed up freight rates for long-range tankers by nearly 20 percent since last week, a shipbroker said.

Saudi Arabia opened its newest 400,000-barrels per day refinery in Yanbu in April, reaching full capacity within two months.

"Yanbu has become a distillates monster," a shipbroker said, referring to the hike in exports from the Red Sea port.

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Genesis to buy Enterprise's U.S. Gulf business

Pipeline company Genesis Energy LP said it would buy Enterprise Products Partners LP's Gulf of Mexico pipelines and services business for about $1.5 billion to expand its offshore pipelines business.

Enterprise said the sale will help fund asset purchases in the Eagle Ford and Permian basin in Texas.

The offshore assets being acquired include Enterprise's stake in nine crude oil pipeline systems with more than 1,100 miles of pipeline and nine natural gas pipeline systems totaling about 1,200 miles.

Enterprise said it expects to record an impairment charge of about $100 million related to the sale in the quarter ended June 30.

Genesis Energy said it expects the acquisition to add to its four offshore pipelines in the Gulf of Mexico.

The company said the acquisition, which is expected to close this month, would immediately add to its cash available for distribution.

Woodside Q2 revenue down over a third on weak gas price

Woodside Q2 revenue down over a third on weak gas price

Woodside Petroleum, Australia's biggest independent oil and gas company, on Thursday posted a 36 percent fall in second-quarter revenue from the first quarter due to weak gas prices and lower production volumes from its Pluto LNG venture.

The sharp decline, which was in line with analysts' estimates, was blamed by Woodside on a 35 percent slide in liquefied natural gas prices after a drop in indexed prices to $64 per barrel.

The price was calculated based on a four-month lag between LNG prices and the Japanese crude import price on which long-term contracts are based.

The situation was compounded by an 18 percent decline in sales volume due to lower production at its Pluto LNG operation in Western Australia and the timing of shipments.

Woodside reported $898 million in sales revenue during in the quarter, down from $1.4 billion in the first quarter.

LNG revenues from the Pluto venture more than halved to $346 million in the second quarter.

Despite the setback, Woodside maintained its production target range of 86 to 94 million barrels of oil equivalent in 2015.

First phase of historic Mexico oil auction misses expectations

Mexico auctioned only two of 14 blocks in a pivotal oil and gas tender on Wednesday, falling far short of the government's modest expectations as it begins to open up the long-nationalized industry to private investment.

Both the shallow water exploration and production contracts were awarded to the same consortium made up of Mexico's Sierra Oil & Gas, U.S. firm Talos Energy and Britain's Premier Oil.

The other 12 blocks received no bids, or none that cleared the bar set by Mexico's finance ministry, marking an inauspicious debut for the rollout of President Enrique Pena Nieto's signature economic reform.

"Without doubt, the start of round one didn't have the momentum we were hoping for," said Juan Carlos Zepeda, president of Mexico's oil regulator, known as the CNH.

Still, Zepeda called it "a solid start," pointing to a transparent process and the fact that seven private firms bid.

In the second block up for grabs, the government said the consortium would ultimately pay a total government take of between 74 and 86 percent of profits. In the seventh block, it saw the figure at between 83 and 88 percent of profits.

The government take is the sum total of the contract's fiscal terms, including a variable royalty, income tax, surface rental fee and the percentage of pre-tax profits.

The energy ministry said previously that at least 30 percent, or five contract awards, of the 14 would be a success. Blocks not awarded can be tendered again at a later date.

A total of 34 companies, either in consortia or alone, pre-qualified for the first set of 14 shallow water production-sharing contracts, including U.S.-based majors ExxonMobil and Chevron.

WVU Research Shock Finding: Utica is as Big as Marcellus!

Data from a two-year geological study conducted by the Appalachian Oil and Natural Gas Research Consortium, a group of state and federal officials along with university researchers representing West Virginia, Ohio, Pennsylvania, Kentucky and New York, was presented yesterday in Canonsburg, PA.

The study, titled “A Geologic Play Book for Utica Shale Appalachian Basin Exploration”, finds the Utica Shale play has 20 times more recoverable natural gas than thought just three years ago–an astonishing 782 trillion cubic feet of natural gas in the Utica.

Here’s the shocker news coming from the release of this new study: The size and potential recoverable resources in the Utica are “comparable” to the Marcellus play, the largest shale oil and gas play in the U.S. and the second largest in the world. You read that right. The Utica is potentially as big as the Marcellus!

The Utica is located pretty much underneath the Marcellus. The depths vary, but the Marcellus is around a mile down and the Utica around two miles down. Researchers at the top-notch West Virginia University took the lead in publishing the report.

Manhattan Institute Says Now is Time to Ramp Up Shale Production

The New York-based Manhattan Institute, a non-profit think tank with a mission “to develop and disseminate new ideas that foster greater economic choice and individual responsibility” has just released a new report titled, “Step on the Gas! How to Extend America’s Energy Advantage”.

The 20-page report says now is the time for the U.S. to press its advantage in shale energy. The report’s writer, senior fellow at the Manhattan Institute, Oren Cass, points out the cyclical nature of commodity prices for oil and gas and says even though prices are down now–they won’t stay that way. In order to take full advantage of the shale boom, Cass suggests 11 reforms to help craft a smarter U.S. energy policy–one that will amplify the current boom and extend it far into the future.

At the top of the hit parade: allow domestic producers to export oil and gas, and streamline the process to let it happen more quickly.

Sanchez Energy announces second quarter 2015 operating results

Record production of 4,907 thousand barrels of oil equivalent during the second quarter 2015 for average production of 53,920 barrels of oil equivalent per day ('BOE/D') driven by shorter drilling times and strong production from recent wells put on production at Catarina. Average daily production exceeded the high end of the Company's second quarter guidance range of 42,000 to 46,000 BOE/D. Current production is approximately 53,000 BOE/D.The two most recent two-well pads at South-Central Catarina have averaged 24-hour initial production rates between 1,400 and 1,800 BOE/D and are trending in line with the strongest wells in Western Catarina.Based on recent operating results in the first half of 2015, the Company is increasing its full year 2015 production guidance range to 44,000 to 48,000 BOE/D.The Company has met all Catarina drilling commitments for the annual term, which ended June 30, 2015, by drilling 68 wells towards the 50-well annual commitment. The Company enters the next well-commitment year with a bank of 18 wells that reduces the number of remaining wells in the next 50-well annual commitment to 32 wells required to be drilled before June 30, 2016.Well costs in Catarina have decreased from approximately $6.5 million per well that was budgeted at the start of 2015, to below $4.5 million currently.

Management comments

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: 'During the second quarter 2015, we had success on a number of fronts. Estimated production for the second quarter 2015 averaged approximately 53,920 BOE/D. As a result of operational efficiencies, we are now able to drill and complete wells at a faster pace and at lower costs. This improvement in productivity has allowed us to put online additional wells in the first half of 2015 without spending additional capital beyond the budget or increasing the number of drilling rigs working on our assets. The additional wells brought online, combined with better-than-anticipated production results at Catarina, has allowed our company to significantly exceed the high end of our second quarter production guidance of 42,000 to 46,000 BOE/D.'

US oil production

Summary of Weekly Petroleum Data for the Week Ending July 10, 2015

U.S. crude oil refinery inputs averaged over 16.8 million barrels per day during the week ending July 10, 2015, 229,000 barrels per day more than the previous week’s average. Refineries operated at 95.3% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.7 million barrels per day. Distillate fuel production increased slightly last week, averaging 5.1 million barrels per day.

U.S. crude oil imports averaged about 7.4 million barrels per day last week, up by 38,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 1.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 682,000 barrels per day. Distillate fuel imports averaged 146,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.3 million barrels from the previous week. At 461.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.1 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.8 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.8 million barrels last week.

Total products supplied over the last four-week period averaged 19.9 million barrels per day, up by 3.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.6 million barrels per day, up by 6.5% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 2.3% from the same period last year. Jet fuel product supplied is down 4.7% compared to the same four-week period last year.

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Iran Oil Boost on Hold to 2016 as Nuclear Inspectors Go to Work

Global oil markets won’t feel the real impact of Iran’s historic deal with world powers until 2016 as sanctions remain in place while nuclear inspectors go to work, said banks.

OPEC’s fourth-largest member won’t achieve a crude-export boost of more than 500,000 barrels a day, or about 50 percent, until next year as Iran’s compliance with curbs on its nuclear program is verified, the banks say. The nation will probably choose to gradually increase exports once sanctions are lifted, rather than risk lower prices by rapidly pushing crude into an oversupplied market, according to the International Energy Agency.

It will be a long and winding road before Iranian oil returns to the market

The agreement between Iran and six world powers will eventually lift restrictions that have halved its crude exports, provided the Persian Gulf nation removes nuclear centrifuges and cuts uranium stockpiles. Sanctions will remain in place at least until international monitors report on the country’s compliance in December.

“The current time line for the lifting of sanctions precludes any substantial increase from Iran” this year, Harry Tchilinguirian, head of commodity markets strategy at BNP in London, said by e-mail Tuesday. “It will be a long and winding road before Iranian oil returns to the market.”

Obstacles to the restoration of Iran’s exports mean the early drop was “overdone,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

GAIL sells 2 mn tonnes US LNG abroad

State-owned gas utility GAIL India Ltd has sold overseas two million tonnes of liquefied natural gas (LNG) it had contracted from the US, its Chairman B C Tripathi said today.

Out of the two million tonnes of LNG, one million tonne has been sold to Royal Dutch Shell.

Tripathi refused to give details of other buyers.

GAIL has signed a contract to buy 3.5 million tonnes of LNG per year for 20 years from the US-based Cheniere Energy and has also booked capacity for another 2.3 million tonnes per annum at Dominion Energy's Cove Point liquefaction plant.

The landed price of US LNG in India is not likely to be less than USD 10 per million British thermal unit, a rate that domestic industry may consider high after adding taxes, transportation charges and margins.

Afren warns on near-term oil production; shares halted

Oil producer Afren Plc warned that its near-term production would likely be "materially lower" than expected as uncertainty over the results of a business review made it unable to assess its financial position.

The London-listed company said that the uncertainty spurred it to seek the suspension of trading in its shares.

Afren, which has been burdened by debt, said it would talk to its bondholders regarding its request for a further $30 million funding.

Suncor, Partners Test Radio-Frequency-Based Crude Extraction

Canadian oil-sands company Suncor Energy Inc. said Tuesday that it and several partners will begin a pilot project using radio frequencies to produce heavy crude, which the company said was the first such production test of the technology on subterranean oil-sands deposits.

The consortium, which includes oil-sands producers Devon Energy Corp. andCnooc Ltd. unit Nexen Energy ULC, along with Melbourne, Florida-basedHarris Corp., will start small-scale test production at a pair of wells on Suncor’s Dover site in northern Alberta and run the pilot for about two years.

Radio-frequency-based extraction holds the promise of being more environmentally friendly and cheaper than standard oil-sands production. It could reduce or eliminate the need for steam generated by heating water with natural gas, an expensive and carbon-intensive process.

“If successful and commercially viable, it has the potential to improve economic and environmental performance in the oil sands by eliminating the need for water” to produce oil, Gary Bunio, Suncor’s general manager of oil-sands strategic technology, said in a statement.

The pilot project will cost about 44 million Canadian dollars (US$34.6 million) and, if successful, will lead to a full commercial scale field test, according to a Suncor spokesperson.

The new technology involves sending electromagnetic waves into hockey-puck-hard deposits of oil embedded in sand underground, something like an underground microwave oven. The liquefied crude, or asphalt, is then mixed with a recyclable chemical solvent and retrieved via a horizontally-drilled well.

Known as enhanced solvent extraction incorporating electromagnetic heating, it is one of a handful of developing technologies that may be used in the future to exploit large-scale deposits of oil sands that are too deep underground to reach by strip mining.

Chinese tankers to carry U.S. shale gas to Europe

Two gas tankers built by the Sinopacific Offshore and Engineering were named on Tuesday, and will soon be shipping shale gas to Europe from the United States, officials said.

The ships will join an eventual eight-strong fleet of tankers operated by Swiss-headquartered petrochemical manufacturer Ineos Group Ltd, which will carry 800,000 tons of shale gas annually from the U.S. to its European manufacturing plants.

Jim Ratcliffe, Ineos' founder and chairman, said the $1 billion project will help revolutionize the European chemicals industry by reducing both feedstock and energy costs.

"Bringing U.S. shale gas to Europe is a huge undertaking, involving Ineos experts from across the globe. To see these two ships finally completed here in China means that this vast project will soon be fully operational."

Simon Liang, Sinopacific Offshore and Engineering's chairman and CEO, said more than 2,000 people had been involved in the building of the two "Dragon Class" ships, each of which required about one-million man hours of work.

The JS Ineos Insight and JS Ineos Ingenuity will join six other vessels in creating what the company described as a "virtue pipeline", to transport over 800,000 tons of gas a year at minus 90 degrees centigrade across the Atlantic to plants in Norway and Scotland.

Each ship will be the length of two soccer pitches and be able to carry over 27,500 cubic meters of liquefied gas. The first two ships will begin their maiden voyage this month.

"We have seen U.S. shale gas revolutionize U.S. manufacturing and we believe the completion of this project will help do the same for Europe," said Ratcliffe.

Russian Oil and Condensate Production Hits Post-Soviet Record

Russian oil and condensate production reached a new post-soviet record of 10.7 million barrels a day in 2015, according to the latest analysis from Wood Mackenzie.

The research firm claims that condensate production will increase by 50 percent by 2018, compared to 2014 levels, although Wood Mackenzie warns that Russia could face a sizeable production gap after 2020, when the impact of Western sanctions kick in.

"We see Russia defying expectations in terms of 2015 liquid production levels achieving a new post-soviet record of 10.7 million barrels per day. The steady increase seen in the first half of this year is contrary to many pessimistic predictions, due to the turbulent geopolitical situation for the country as a result of the Ukraine crisis and subsequent Western sanctions. We see actual growth in liquids being driven by condensate, but given the unfavourable macro-economic situation with a volatile Rouble and depressed oil price, there is significant uncertainty for Russian production in the longer-term, post 2020."

"Despite West Siberia's production peaking in the 1980s, the region remains core and is expected to contribute 60 percent of Russia's liquids production this year. Russian operators are looking at deeper and more complex reservoirs such as the Tyumen and Achimov, these areas are widely regarded as 'hard-to-recover' but are still far easier to develop than unconventional shale plays such as the gargantuan Bazhenov expanse. Currently the Tyumen and Achimov areas each contribute between 6-7 percent of West Siberian (4 percent of Russia's overall) production and we expect this could more than double by 2020."

Is There Any Hope Left for SandRidge Energy Inc. Investors?

SandRidge Energy Inc. was supposed to be an undervalued turnaround story with the potential to double its stock price in short order. That was when the stock was at $5 per share and oil was persistently in the triple digits. Now, however, with oil hovering around $50 a barrel, the stock is under a buck per share. It's a stock price that suggests that there isn't much hope left for SandRidge Energy investors that this company will ever turn around as its issues continue to mount.

While the persistently weak oil price is at the center of SandRidge Energy's troubles, it is far from its only issue. A more pressing issue is the gargantuan amount of debt it borrowed to fund its growth over the past few years. It's debt that is becoming a nearly insurmountable weight as the company doesn't stand a chance of drilling its way out of it as it had planned to do in years past.

After its most recent $1.25 billion debt issuance, SandRidge now has $4.6 billion in debt outstanding. That's an incredible amount of debt and, for perspective, there are oil companies 10 times its size with similar levels of outstanding debt. Worse yet is the fact that the PV-10 value of SandRidge's reserves, or the present value of its proved reserves discounted by 10%, is a mere $3.04 billion at recent projected forward oil and gas prices. It's an imbalance that suggests that SandRidge Energy could be insolvent if current prices persist.

To make matters worse, SandRidge's ability to repay that debt is in serious jeopardy. For example, last quarter 64% of SandRidge Energy's revenue didn't come from its oil and gas sales, but from oil and gas hedge gains. It's a safety net that Bloomberg recently reminded investors is going away as SandRidge's hedges begin to roll off as we head into 2016. In fact, as Bloomberg pointed out, SandRidge hedged 90% of its production in 2015, but only has about a third of 2016 production hedged. That suggests its cash flow will drop significantly in 2016, leaving it with less cash to drill new wells along with less cash to maintain its debt.

Another emerging concern is the rash of earthquakes to hit the state of Oklahoma, where SandRidge Energy operates. The state's energy regulator recently called the spike in quakes a "game changer" and is now considering tougher restrictions on drilling activity. The driving force behind these quakes is believed to be high-volume wastewater injection wells, which are critical to the operations of companies like SandRidge Energy as these wells significantly reduce the costs of trucking wastewater away from wells.

Not only is this system critical to SandRidge Energy's operations, but it had planned to put its entire saltwater disposal system into an MLP and use that business to raise capital via an IPO. That would enable it to recoup some of the more than $600 million it invested into the system. Its capital that the company needs given its hefty debt load, but money it might never see if regulators put restrictions on these wells.

SandRidge Energy's main focus right now is to get its well costs below $2.4 million, which would enable it to earn a 50% internal rate of return on new wells at current commodity prices. That return just happens to be the same one the company was earnings when oil was in the $80-per-barrel range when its well costs were north of $3 million per well. If it's successful, the company will be able to cut its capital spending from its current rate of $700 million down to an annual average of $400 million to maintain flat production.

All that being said, even if that plan works, it really just has the company stuck in neutral. It doesn't grow its cash flow so that it can support its debt load. Furthermore, it's questionable whether the company will even be able to generate $400 million in cash flow to support that type of capital program given its debt load. Instead, its only hope of surviving is for oil prices to rally meaningfully higher and it's anyone's guess when, or even if, that will happen.

WPX Energy to enter Permian Basin with $2.35 bln deal

Oil and gas producer WPX Energy Inc said it would acquire privately held RKI Exploration & Production LLC for $2.35 billion, the latest in a series of deals brought on by a steep drop in crude prices.

WPX, which will also assume $400 million of RKI's debt, said the deal would give it access to the liquids-rich Permian basin of Texas and New Mexico - the biggest and fastest growing U.S. shale oil field.

The deal comes two months after Noble Energy Inc said it would buy Rosetta Resources Inc for about $2 billion in the first significant shale deal since the oil rout began last summer.

A nearly 50 percent drop in crude prices since highs of over $100 per barrel in June last year has lead to several big-ticket acquisitions, including Royal Dutch Shell's $70 billion deal for BG Group.

The assets WPX is buying produce about 22,000 barrels of oil equivalent per day, 69 percent of which is oil and natural gas liquids.

With the acquisition, WPX expects oil to account for nearly a third of its output in 2016 compared with about 20 percent now. The deal is expected to close by the end of the third quarter.

WPX said on Tuesday it planned to increase the rig count in the Permian basin to six from four by the end of the year.

With crude prices steadying at about the $50 mark, several oil producers including EOG Resources Inc, Concho Resources Inc and Devon Energy Corp are putting rigs back to work and boosting production.

The deal excludes RKI's operations in the Powder River basin in Eastern Wyoming, WPX said. RKI will divest or transfer the assets before completion of the deal.

Iran to return to oil market with maximum capacity -Shana

Iran will return to the global oil market with maximum capacity once the sanctions against the country are lifted following Iran's nuclear deal with world powers, a deputy oil minister was quoted as saying on Tuesday.

Iran views the Asian market as a top priority for selling its crude oil, Mohsen Qamsari, director of international affairs at the National Iranian Oil Company was cited as saying by Shana, the oil ministry's news agency.

"We will try to maximise our crude export capacity to Europe and restore 42 to 43 percent share in the European market before the sanctions were imposed," said Qamsari.

Oil Minister Bijan Zanganeh said last month that Iran was aiming to add 500,000 barrels per day (bpd) to production within two months of easing Western sanctions that have halved shipments in recent years, and as much as 1 million bpd in six to seven months.

But years of underinvestment mean Iran may struggle to get its oil industry anywhere near full potential, analysts say. It will also take time for Tehran to raise output as nuclear inspectors verify Iran's compliance with the terms of any deal and sanctions are slowly removed.

A Reuters poll of 25 oil analysts from leading banks and brokerages forecast Iran would be able to raise crude oil output by 250,000 to 500,000 bpd by the end of this year and by up to 750,000 bpd by mid-2016.

DOE grants additional export volumes to Cameron LNG

The United States Department of Energy issued an order granting a 20-year authorization to export liquefied natural gas to Cameron LNG equivalent to approximately 515 billion cubic feet per year to free trade agreement countries.

Cameron LNG requested the additional export authorization from existing LNG terminal in Cameron, Louisiana, the notice reveals. The additional export volume will be produced at the company’s two new liquefaction trains to be constructed on the site.

DOE previously authorized Cameron LNG to export 772 billion cubic feet per year of natural gas from the first three liquefaction trains. This new authorization brings the total authorized FTA volume to 1,287 billion cubic feet per year.

The company has also been authorized to export up to 620 billion cubic feet of natural gas to non-FTA countries for a period of 20 years.

Cameron LNG expects to have the first liquefaction train completed and put into service in 2017 with second and third coming online in 2008 bringing the capacity up to 14,95 Mtpa of LNG.

Trains four and five would increase the LNG production capacity by 9.97 million metric tons per annum raising Cameron LNG’s total export capacity to 24.92 Mtpa.

Rosneft and Statoil complete pilot drilling at the North-Komsomolskoye Field

Rosneft and Statoil ASA completed drilling works as part of the Pilot Project at the PK1 layer of the North-Komsomolskoye field. During 2015 the companies jointly drilled 2 horizontal exploitation wells.

Using best global practices Rosneft and Statoil ASA implemented extended logging, including core and fluid samplings. Also, for the first time onshore in Russia, a well was completed using 'openhole gravel packing' in a horizontal section of 1,000 m.

Rosneft and Statoil plan to hold wells testing and determine further prospects and methods of PK1 layer development based on the testing results.

Implementation of the Project may allow effective development of about 600 mln tons of geological oil in place at the North-Komsomolskoye field in the short term.

Commenting on the drilling completion, Igor Sechin said:

'Creation of partnerships for technologically complex projects' development is one of the strategic dimensions of the Company's evolvement. The pilot drilling at the North-Komsomolskoye field opens a new stage of the joint work of Rosneft and Statoil. The companies are working actively and continue developing the long-term cooperation.'

Argentina Plans Up to $784.3 Million in Bonds for Oil Companies

Argentina plans to issue as much as $784.3 million of bonds to pay debt owed to oil producers that participated in a program designed to encourage companies to boost output.

The government will offer two different bonds to cancel the debt under the Petroleo Plus program created in 2008 and unpaid since 2012, according to a decree published Monday in the official gazette. Among companies holding credits under Petroleo Plus are Pan American Energy LLC and Pluspetrol SA.

Argentina will issue mostly new debt maturing in 2024, the same bond it used last year to compensate Madrid-based Repsol SA for the 51 percent stake in oil producer YPF that President Cristina Fernandez de Kirchner expropriated in 2012.

The government hopes the settlement “will pave the way for investments in its oil and natural gas industry,” according to the decree.

Oil producers will get at least 20 percent of the amount owed by the government in Bonad 2018 bonds with a 2.4 percent coupon and as much as 80 percent in Bonar 2024 bonds, with a 8.75 percent coupon.

The outstanding Bonar 2024 slipped 0.18 cent to 97.78 cents on the dollar, pushing the yield up 0.04 percentage point to 9.41 percent, data compiled by Bloomberg show.

The companies will have 30 days to submit bond preferences and agree to terms, according to the decree, which said the government discontinued Petroleo Plus. The government established the program as an incentive to bolster declining production but stopped paying in 2012.

Oil output from U.S. shale plays seen down for fourth month -EIA

Oil production from U.S. shale in August is expected to fall by the most since at least 2007, according to the U.S. agency tasked with tracking oil output, the latest sign a price rout will shrink the nation's crude output.

Oil production from the largest U.S. shale plays will plunge in August for a fourth consecutive month, forecasts from the U.S. Energy Information Administration showed on Monday.

Output was expected to decline by 91,000 barrels per day, 12 percent over July's forecast production decline, to 5.4 million bpd, the lowest level since November for the seven shale plays tracked in EIA's productivity report.

Energy firms fired thousands of workers and cut back on new drilling after U.S. crude futures collapsed 60 percent from over $107 a barrel in June 2014 to near $42 in March on oversupply concerns and lackluster world demand.

Despite the cuts, however, U.S. production averaged 9.6 million bpd during the week ended July 3 for a seventh week in a row, its highest level since the early 1970s, according to the most recent government data.

Several energy firms decided to return to the well pad during May and June when prices averaged $60 a barrel after rebounding off the March lows. The firms have not publicly changed those new drilling plans even though crude prices fell last week and were now trading around $52 a barrel.

In the Bakken shale play, for example, North Dakota regulators said the state's well count hit a record high in May with producers deciding to hydraulically fracture more freshly drilled wells, bucking a trend to mothball them. Drilling permit applications also spiked.

Oil production in the Bakken in North Dakota and Montana was expected to fall 22,000 bpd to 1.2 million bpd in August, while Eagle Ford oil production in South Texas was expected to drop 55,000 bpd to 1.5 million bpd.

Oil production in the Permian play of West Texas and New Mexico, the biggest U.S. shale oil play, however, was expected to rise 5,000 bpd to 2.0 million bpd.

Train lobby bids to weaken safety rule

Senate Republicans bid to weaken new regulations to improve train safety in the $2.8 billion crude-by-rail industry, a key cog in the development of the vast North American shale oil fields.

A series of oil train accidents, including the July 2013 explosion of a train carrying crude in Lac-Megantic, Quebec, that killed 47 people, led U.S. and Canadian regulators to announce sweeping safety rules in May. Among other things, U.S. oil trains are required to install new electronically controlled pneumatic (ECP) brakes.

But in late June, the Republican-controlled Senate Commerce Committee approved a measure to drop that requirement, and order years of new research to confirm the safety benefits of ECP brakes.

On Wednesday, the panel will decide whether to send the measure to the full Senate, setting the stage for a fight with Democrats who say the repeal would delay the use of feature that can help avoid catastrophic derailments and minimize the consequences of accidents that do occur.

The looming debate pits Democrats, federal regulators, safety advocates and environmentalists against the crude-by-rail industry, which claims that installing the brakes would slap an unnecessary $3 billion cost on railroads, oil refiners and other owners of rolling stock, and potentially jeopardize safety.

U.S. Natural Gas Production in June Fell Slightly From May: Bentek

Natural gas production in the lower 48 United States averaged 72 billion cubic feet per day (Bcf/d) in June, down about 0.6 Bcf/d from the May average, according to Bentek Energy®, an analytics and forecasting unit of Platts. On a month-over-month basis, June natural gas production was down less than 1% from May.

The U.S. Energy Information Administration (EIA) will publish its domestic production estimates for April on or around July 31, 2015.

"The month-on-month U.S. production decline observed in June was largely attributed to continued maintenance events in the Northeast," said Sami Yahya, Bentek energy analyst. "The combination of reduced drilling and completion costs, as well as considerable efficiency gains in the field, has helped producers across most regions better cope with the distressed commodity prices."

According to Bentek's data analysis, the average cost of service companies is down about 20% since last year. Also down are drill times, which have declined, on average, by three to five days this year in multiple regions.

"This translates into the ability of producers to utilize less rigs but drill more wells," said Yahya. He pointed to the fact that some producers have indicated that in the past they tended to drill and complete a cluster of wells within an area and move on to the next cluster. But now, they say they are more likely to drill all of the clusters first and come back only later to complete those wells—saving money by not bringing completion rigs back and forth.

"This can also be viewed as completion deferment," Yahya noted. "It's also worth noting that high-grading - or focusing on higher initial production rate areas - remains the primary trend in most areas."

Bentek data analysis suggests 2015 U.S. natural gas production will average approximately 72.8 Bcf/d (which has recently been reduced from 73 Bcf/d due to persistent maintenance and outages), with growth occurring throughout the year, driven almost exclusively by continued production gains in the Northeast.

The Bentek data analysis is based on an extensive sample of near real-time production receipt data from the U.S. lower 48 interstate pipeline system. Platts' Bentek production models are highly correlated with and provide an advance glimpse of federal government statistics from the U.S. EIA.

Argentina brings the curtain down on energy tax credits

Argentina ended some financial incentives today that were intended to boost energy investment in its huge shale oil and gas deposits, even as it seeks to narrow an energy trade gap.

The government announcement in an official gazette comes as Argentina seeks to develop its its vast but barely tapped Vaca Muerta shale deposits, to help it trim a $6billion trade deficit in oil, gas and electrical energy supply.

Oil company officials privately complain that President Cristina Fernandez’s unorthodox policy-making is often unpredictable and makes doing business in Latin America’s third largest economy difficult.

Even so, the scrapping of the tax credits, which were introduced when the government-controlled price for locally produced oil was significantly below the global market price, is not expected to damage the industry as domestic crude prices are now higher than those of world markets.

“The state now is looking to pay its debts from the programme, which worked well as it maintained activity in the sector,” an oil company official said on condition of anonymity.

Oil producers in Argentina currently receive $77 per barrel, while Brent crude was today trading at $57.70.

Other Argentine incentives remain in place. In January, the government unveiled a stimulus that guaranteed producers a maximum $3 per barrel subsidy when quarterly output exceeds a government-set base level. Exporters receive up to an additional $2 per barrel for every barrel of crude shipped abroad.

Developing Vaca Muerta, a formation that covers an area similar to Belgium, will cost up to $200billion over the next 10 years, state-controlled energy firm YPF says.

Could falling foreign reserves emerge as a challenge to Saudi oil policy?

Holding a war chest of assets, Saudi Arabia calculated it could withstand lower oil prices better than its competitors, pushing high-cost producers out of the market and grabbing market share.

That strategy has been playing out as across the globe, but to reach its conclusion, the Saudis cannot blink even as it burns through foreign reserves.

Coffers are hardly depleted, but the pace of decline has been impressive. Foreign reserves were 2,537 billion riyal ($677 billion) in May, down 9% from August, according to the Saudi Arabian Monetary Agency.

The biggest monthly decline during that stretch came in March when foreign reserves plummeted 59 billion riyal.

With government revenue slashed by lower oil prices, Saudi Arabia has been forced to dip into its rainy day fund to cover budget holes.

The country’s budget deficit is forecast by the IMF to equal 20% of GDP this year, quite a turnaround from recent years of surpluses.

The impact of low oil prices on Saudi Arabia’s budget is stark. In 2015, government revenue in expected to equal 700 billion riyals, down from 1,044 billion riyals in 2014, according to Riyadh-based Jadwa Investment.

The outflow of government deposits could slow because the government is anticipated to start issuing debt as another means to finance the deficit, Tim Callen, the IMF’s mission chief to Saudi Arabia, said in June.

Regardless, deficits will remain a fact of life unless the arithmetic changes.

All of this begs the question whether the pressure of budget deficits and dwindling foreign reserves will sway official thinking behind Saudi Arabia’s oil policy.

Might patience run dry while waiting for market forces to weed out high-cost producers? If so, will the Saudis reverse course and lobby for OPEC members to lower their output target in order to prop up prices?

Such a move would come as a shock to those who interpreted the kingdom’s decision last November to hold OPEC production steady as a permanent break from its traditional role as the world’s balancer of supply and demand.

In fact, says scholar F. Gregory Gause, the Saudi decision was perfectly consistent with its guiding principle followed since the mid-1980s of cutting production only if others do the same.

“In 1986, the Saudis decided that they were done playing the patsy,” Gause said in a policy briefing for the Brookings Doha Center. “If other oil producers were not going to bear the costs of cutting production to put a floor under prices, neither were they.”

In 2014, the Saudis opted to use their financial reserves to withstand low prices and put pressure on competitors, including the North American shale producers, he said.

Now that lower oil prices have begun hurting many oil producers, and the Saudis to a lesser degree, the stage may be set for cooperation, Gause said

Flotilla Protesters Buoyed by Delay to $1.7 Billion LNG Plant

While the proponent of a Howe Sound liquefied natural gas plant has pushed pause on the $1.7-billion project, area residents haven't suspended their campaign against it.

More than three-dozen power and sail boats -- as small as a rigid inflatable and as big as a yacht -- travelled around Bowyer Island midday July 11, blowing horns, displaying signs and banners and chanting "No LNG, No LNG!" under ominous clouds.

The company behind the project, which has stated it would pay $2 million in local taxes a year and employ 100 full-timers, announced a six-month delay to the review on June 30 after the Squamish Nation Chiefs and Council issued 25 conditions for approval.

The Squamish Nation worries the plant, proposed at a former pulp and paper mill, would pollute the air, land and water, and it wants insurance coverage in the event of a spill or explosion. The nation's conditions are similar to the 18 issued by the District of Squamish on April 30.

"As expected, the conditions reflect Squamish Nation's commitment to protecting land, water and heritage and our focus now is to take the time to review them and work with Squamish Nation to understand their conditions," said Woodfibre LNG vice-president Byng Giraud in a June 30 news release.

Woodfibre LNG proposes to produce 2.1 million tonnes of LNG a year with a 250,000 square-metre storage facility.

Natural gas supplier FortisBC, which built a pipeline in 1990 for the Sunshine Coast and Vancouver Island, proposes a 52-kilometre long, 20-inch diameter gas pipeline from north of the Coquitlam watershed to Squamish that would feed the plant.

Woodfibre LNG still hopes to get regulatory approval and begin construction before the end of the year, but the plant wouldn't be in full operation until 2018, the year after the next provincial election.

OPEC sees more balanced oil market in 2016

The global oil market should be more balanced next year as China and the developing world increase oil consumption while supply of shale oil from North America and other regions grows more slowly, OPEC said on Monday.

In its monthly report, the Organization of the Petroleum Exporting Countries said it expected world oil demand to increase by 1.34 million barrels per day (bpd) in 2016, up from growth of 1.28 million bpd this year.

World oil demand growth should outpace any increase in oil supply from non-OPEC sources and ultra-light oils such as condensate, increasing consumption of OPEC crude oil, it said.

"This would imply an improvement towards a more balanced market," OPEC's in-house economists said in the report.

OPEC said it expected demand for its own crude oil to rise by 860,000 bpd in 2016 to 30.07 million bpd. But it cut its estimate of demand for its crude this year by 100,000 bpd to 29.21 million bpd.

Oil prices are now around half their levels of a year ago with global crude oil benchmark Brent trading at around $58.50 a barrel by 1100 GMT on Monday, down from a peak above $115 in June 2014.

Lower prices have squeezed high-cost oil producers and brought a sharp fall in the number of oil exploration rigs in operation, particularly across North America.

OPEC said supply of oil from non-OPEC producers was expected to grow by only 300,000 bpd in 2016, down sharply from growth of 860,000 bpd this year.

U.S. oil output, which has seen rapid increases over the last five years thanks to the development of huge shale resources by "fracking", is expected to log much more modest supply growth in 2016.

"Total U.S. liquids production is expected to grow by 330,000 bpd, just one third of the growth of 930,000 bpd expected this year," it said.

World oil supply has grown much faster than demand this year, led by OPEC as its core members in the Middle East Gulf attempt to build market share, leading to higher inventories.

Saudi Arabia, in particular, has pushed up its oil production to record highs, industry sources say.

OPEC estimated, based on figures from secondary sources, that its own group crude oil output rose 283,000 bpd to 31.38 million bpd in June, led by Iraq, Saudi Arabia and Nigeria.

It said Saudi Arabia had told it that it pumped 10.56 million bpd last month, up 231,000 bpd from May.

BG Commences Operations at QCLNG Train 2 in Australia

BG Group plc, a world leader in exploration and liquefied natural gas (LNG), announced Monday that it has started up and loaded its first LNG from the second production train at the Queensland Curtis LNG (QCLNG) facility in Australia. The first LNG from Train 2 set sail on the Maran Gas Posidonia.

At plateau production, expected mid-2016, both trains at QCLNG will be producing enough LNG to load 10 vessels per month combined, exporting around eight million tons per year. Since production from the first train commenced in December 2014, 27 cargoes have been shipped.

BG Group began commercial operations in May, when control of Train 1 formally transferred to QGC, BG Group's Australian subsidiary, from the constructor Bechtel Australia. Train 2 commercial operations will begin once a similar commissioning process has been completed.

Attached Files

North Dakota crude production climbs, gas hits new record

Despite e a plunge in statewide permitting and the rig count, North Dakota crude oil production climbed roughly 3% from April to May and natural gas output hit a new record high, the state's Department of Mineral Resources said Friday.

May gas production hit nearly 1.63 Bcf/d, up from 1.53 Bcf/d in April and a new all-time high for the state.

May oil production totaled more than 37.23 million barrels, or over 1.2 million b/d, compared with April's production of less than 1.17 million b/d.

Statewide oil production reversed a recent downturn that followed December's all-time high of 1.23 million b/d, the agency said.

There were 12,659 producing wells in North Dakota in May, also a new record, and up 114 wells from April. At the same time, well completions rose to 114 in May from 102 in April as initial production rates have increased 10-20% a month as producers focus on the "core" areas of the Bakken and Three Forks formations, where 98% of drilling in North Dakota is now targeted.

The new records came as drilling permits fell to 150, down from 168 a month before, and the rig count fell to 83, compared to the all-time high of 218 in May 2012. The rig count, which averaged 78 in June, fell to 73 on Friday, the lowest since November 2009, when it was 63, the agency said.

In the Asian spot market, prices slid to a near six-month low Wednesday, weighed down by the plunge in crude oil prices, though it has since rebounded slightly on Thursday. CFR South China refrigerated LPG was assessed at $454/mt for propane and $481/mt for butane Thursday, down from $468/mt and $501/mt, respectively, a week ago, Platts data showed.

The fall in international crude oil and LPG has further dampened market sentiment this week, trade sources noted.

"Based on the recent Asian LPG values, import cost for H1 August-delivery refrigerated cargoes is estimated to be around Yuan 3,150/mt ($515.10/mt) for propane and Yuan 3,350/mt for butane after adding taxes -- lower than the spot prices in the wholesale market currently," a trader in South China said.

In China's southern Guangdong province, imported LPG cargoes of mixed propane and butane traded at around Yuan 3,350-Yuan 3,450/mt in the wholesale market this week, down by around Yuan 100/mt from the previous week, though no LPG import terminals received refrigerated LPG this week, trade sources said.

Given lower prices this week, many LPG import terminals were said to have started incurring losses as the import cost for their LPG inventories is estimated to be around Yuan 3,500/mt, higher than the spot prices in the wholesale market, another trader with a major domestic LPG import terminal said.

But many LPG import terminals still had to sell as they were afraid prices would be lower in the future, the trader said. Besides, domestically produced LPG was said to have traded at Yuan 3,300-Yuan 3,400/mt in the region, also down around Yuan 100/mt from last week, according to trade sources.

North Dakota oil-loading hub lays off 10 percent of staff

One of the largest facilities in North Dakota that loads oil onto railcars laid off 10 percent of its staff this week as it pares operations in an environment of lower oil prices, a source familiar with the company's operations said.

Savage Services Corp laid off 12 full-time employees at its 373-acre transloading and pipe logistics facility in Trenton, North Dakota, just outside Williston, the state oil capital, the source said.

The company said it has roughly 118 full-time employees.

Most of those laid off were of higher seniority and salary levels, the source said.

Utah-based Savage confirmed the layoffs at the facility, which can load more than 170,000 barrels of oil per day onto railcars. The company declined to say how many employees had been laid off, but said it had a "modest workforce reduction."

Savage had told employees as recently as two weeks ago that there would be no layoffs, though the severance letters for the 12 were dated June 10, the source said. The company's spokesman Hymas said the date was a typographical error and had been subsequently clarified with employees.

The layoffs occurred as demand for railcars to transport North Dakota's Bakken crude oil is at the lowest it has been in three years. The breakneck pace at which oil-by-rail transport grew since the U.S. shale boom began in 2008 has been tempered by the gradualconstruction of new pipelines.

Savage's Trenton facility operates 24 hours per day, seven days per week, and historically has loaded two 118-railcar trains at once. That likely will be pared back to loading only one train at a time given the reduction in staff, the source said.

US rig count continues upward creep

Although the overall US drilling rig count merely edged up a unit to 863 rigs working during the week ended July 10, it represented the third consecutive week of gains and another jump in oil-directed rigs, according to data from Baker Hughes Inc.

Over the past 3 weeks the overall count has risen 6 units. The warm streak follows 28 consecutive weeks of losses, which has resulted in the count currently having 1,012 fewer units year-over-year.

During the week, rigs targeting oil gained 5 units to 645, now up 17 units from 2 weeks ago after 29 straight weeks of losses. The count hasn’t risen in successive weeks since September 2014. Meanwhile, gas-directed rigs were down for a second week in a row, dropping 2 units to 217. Rigs considered unclassified lost 2 units to reach 1 rig working.

Land rigs, up 4 last week, edged down a unit this week to 827. Rigs engaged in horizontal drilling, up last week for the first time in 32 weeks, fell 3 units to 654. Directional drilling rigs lost 9 units to 88.

Rising 5 units to 368, Texas led the major oil- and gas-producing states in its second consecutive week of gains after 32 straight weeks of losses. It’s the first time the state was posted a rise in successive weeks since October 2014. Texas still has 530 fewer rigs working year-over-year.

The Permian led the major basins with a 7-unit jump to 239, all of which are targeting oil. It’s the basin’s biggest rise since October 2014. The Eagle Ford, however, fell 4 units to 102.

Canada’s rig count also continued its upward momentum, jumping 30 units to 169. Its count has now risen in 7 of the last 9 weeks, gaining 94 units over that time. This week’s gain was spurred by a rebound in oil-directed rigs from last week’s losses. Up 19 units to 91, oil-directed rigs have risen 75 units since a recent nadir on May 8. Gas-directed rigs, meanwhile, gained 11 units to 78. Canada’s overall count is still down 146 year-over-year.

China June crude oil imports up 27 pct on year in challenge to U.S. for top spot

China's June crude oil imports rose 27 percent on year, customs data showed on Monday, putting the world's second largest economy into contention again for topping the United States as the biggest buyer of the commodity on international markets.

China imported 29.49 million tonnes, or 7.176 million barrels per day (bpd) in June, data from the General Administration of Customs showed, up 31 percent from a 19-month low in May as demand remains strong amid weak global oil prices.

The June imports may have surpassed those of the United States for the second month this year, depending on the rate used for converting tonnes to barrels.

Data from the U.S. Energy Information Administration (EIA) showed that U.S. crude imports in the four weeks to July 3 totalled 7.165 million bpd, although the data has not yet been compiled into monthly reports for May and June.

China has been taking advantage of oil prices that are half of last year's peak to fill itsstrategic reserves, analysts say, helping to support crude benchmarks that are still under pressure from a global supply glut.

China's crude imports were up 7.5 percent in the first half of 2015 to 6.59 million bpd, still behind U.S. imports of about 7.2 million bpd for the year so far, according to EIA figures.

In purchasing more oil than what it needed for its refineries, China accumulated an implied surplus of roughly 41 million barrels in the first five months of the year, according to a Reuters analysis of Chinese government data.

The surplus, which is only a rough estimate of how much oil is available to fill the reserves, was at 82 million barrels at the same time last year.

Analysts have said that China's surplus purchases have been going into both strategic and commercial storage tanks, although the government rarely releases any details.

China's appetite for crude is expected to pick up in the second half of the year as newstorage tanks are finished.

Beijing has also been opening its crude imports to buyers outside the state-owned sector, and independent refiners with new import allowances may push up shipments.

The June import volumes came in higher than an earlier estimate by Thomson Reuters Oil Research and Forecasts of 26.87 million tonnes. July imports are forecast to fall about 2 million tonnes from June's actual volumes.

Teck delays high-cost Canada oil sands project

Teck Resources Ltd is delaying development of its massive, high-cost Frontier oil sands project in northern Alberta by five years.

The Vancouver-based mining company said in an update filed with regulators that it now expects first oil from the multibillion-dollar Western Canadian project in the first quarter of 2026, rather than in 2021 as previously planned.

Construction of the 260,000 barrel-a-day bitumen mine is planned to start in 2019 and occur in two phases, rather than four, to take advantage of economies of scale, the filing with the Canadian Environmental Agency said.

Production from a second phase is expected in 2037 with mining complete in 2066.

Teck now expects the project to produce 3 billion barrels of bitumen, up from 2.8 billion, reflecting an expanded resource. Capital costs are down to C$20.6 billion ($16.18 billion), from C$22.9 billion, on optimized engineering and increased production, the diversified miner said.

It extended its estimates of the mine's life to 41 years, from 2026 to 2066, up from 37 years.

Teck initially applied in 2011 for approval of the mine, which is 110 kilometers (68 miles) north of the oil sands hub of Fort McMurray, Alberta.

A final decision to proceed with the Frontier project will be made by Teck's board of directors.

"We believe that Teck is considering additional streaming deals on the silver output from its interests in the Antamina and Highland Valley mines," TD Securities analyst Greg Barnes said in a note to clients.

"We believe that Teck could raise proceeds of between $500 million - $1 billion via the silver stream sales. The monies raised could be applied to debt reduction, funding capex for the Fort Hills project or for copper mine acquisitions."

Shell Buys Morgan Stanley’s Europe Gas, Power Trading Portfolio

Royal Dutch Shell Plc agreed to buy Morgan Stanley’s European natural gas and power trading portfolio, adding to a business that’s already among the world’s biggest.

Shell Energy Europe Ltd. will acquire Morgan Stanley’s book of physical and financial gas and power contracts, Shell said in an e-mailed statement Friday. Shell, the second-biggest oil company by revenue, didn’t disclose the value of the transaction.

Trading of oil and gas helped Shell beat analysts’ earningsforecasts in the quarter ended March 31 as it profited from storing crude to sell later at a higher price. Shell’s trading business also allows it to sell more natural gas than it produces, helping the company take advantage of differences in prices around the world.

“This provides innovative solutions for customers to deliver a reliable source of energy, and also to manage the price risk inherent in global commodity markets,” Slavko Preocanin, president of Shell Energy Europe, said in the statement.

Shell, BP Plc and Total SA are the world’s biggest energy traders, handling enough crude oil and refined products every day to meet the consumption of Japan, India, Germany, France, Italy, Spain and the Netherlands.

Alternative Energy

Solar Frontier Expanding Globally As Japanese Solar Market Softens

After three years of brisk sales in Japan driven by an aggressive Feed-in Tariff (FIT), Solar Frontier is looking to expand into the global market and still hopes to build a manufacturing plant in the U.S. according to the company president and CEO Atsuhiko Hirano.

The company purchased a 280-MW pipeline — consisting of about 10 mid-sized projects — from Gestamp earlier this year and plans to use it to “create a foundation” of projects in the U.S., which is one of its key markets. In addition, Solar Frontier has a 100 MW pipeline of projects in the U.K. “So 2013 and 2014 was really all about Japan but now we are making it clear that we are going global,” he explained.

The company also plans to “disperse our production capacity” into the global market and has a very aggressive goal of deploying 3 GW of capacity into the market by 2020.

“In Japan the demand was abut 9.3 GW and we only have 1.3 GW of capacity so we are limited by what we can supply,” Hirano explained. Solar Frontier currently has about 10 percent market share in Japan, which is in line with thin-film’s share of the overall solar market worldwide.

Hirano said that the attractive FIT meant that PV system prices could be higher in Japan than elsewhere, which caused Chinese manufacturers to target the Japanese market and drive up competition. “Unlike the other countries, the Japanese government has been unwilling to impose some type of tariff or duty on Chinese products,” he said. “We have been faced with some price competition that is not based on production cost,” he added.

Hirano would like to see a balanced approach with regard to developing a renewable energy industry, meaning that governments put some value on creating jobs and economic growth driven by the creation of renewable energy products in addition to valuing the clean energy that the products produce. For that same reason, the company is exploring a manufacturing facility in New York.

HANERGY vows to challenge HK regulator's stock halt

Troubled Chinese solar panel maker Hanergy said Hong Kong's securities watchdog is demanding documents it's unable to hand over and vowed to challenge a suspension order that prevents its shares from trading in the Asian financial center.

Hanergy Thin Film Power Group said in a statement late Thursday that it will appeal to the Securities and Futures Commission and may go to court if necessary to challenge the trading halt, which it said was not in the interest of shareholders.

Shares in Hanergy, a unit of Beijing-based Hanergy Holding Group, had already been suspended in Hong Kong since May 20 at the company's request after they plunged by nearly half in a spectacular meltdown that wiped out $19 billion in market value in less than an hour.

The plunge also slashed Chairman Li Hejun's fortune, which surged alongside the rapid rise in Hanergy's stock in the preceding 12 months and had made him, on paper, one of China's richest people.

Hanergy's announcement came a day after the SFC took the rare step of issuing its trading halt, which prevents shares from resuming trading even if the company requests it.

In its statement, the company said the regulator ordered the trading halt because it had refused to hand over financial statements for Hanergy Holding and details of outstanding loans taken out by Li. Hanergy said the documents are the parent company's private financial information and Li's personal affairs.

Hanergy also shed some light on a possible reason for the stock's dramatic drop, saying the "significant price fluctuation was caused by speculations of a possibility" that a customer would not complete a deal to purchase solar panel equipment.

Tesla Executive: Solar Power the big winner as storage costs drop

A top executive at Tesla has been outlining a vision for electricity storage, which is set to have a momentous impact on power generation.

JB Straubel, chief technical officer at the company, says solar power will be the main beneficiary once the cost of lithium-ion batteries continues to decrease.

Speaking in San Francisco on Monday, Straubel described a future in which all vehicles (other than planes and rockets) are powered by batteries, and new electricity systems are built with solar panels combined with batteries.

While the cost of lithium-ion batteries has dropped in recent years, Straubel said that the price will continue to decline dramatically — and he thinks it will happen much more quickly than most people think. These batteries are just at the beginning, or at “the cliff,” of even lower prices, said Straubel.

According to the company co-founder, when the combination of batteries and solar panels become cheap enough to provide electricity for less than the cost of fossil fuel power, solar energy will become the low cost choice.

“Once we get to that there is no going back. That’s the tipping point that’s going to happen, I am quite certain, over the next 10 years,” said Straubel.

In April, after close to five years of research and testing, Tesla launched a new division focused on building batteries for the power grid and buildings, which the company calls “Tesla Energy.”

Attached Files

The price of solar power drops to an incredible new low (again)

A new record low price for solar project bids has been reached, making it the second time this month that previous cost barriers were shattered. This time, the news comes from NV Energy, a Berkshire Hathaway-owned utility company serving the state of Nevada. The utility has signed a PPA to purchase electricity from the 100 MW Playa Solar 2 power plant at the amazingly low price of $0.0387/kWh. This beats the previous record set just a few weeks ago in Austin, Texas, by just a fraction of a penny per kWh. What’s clear is that, as competition heats up to provide less expensive solar power to the grid, we’re looking at a greener future.

Admittedly, this report has us feeling a bit of deja vu, and it’s justified. Less two weeks ago, we reported Austin, Texas had become the site of the lowest solar power bids on earth at just under $0.04/kWh, beating out the previous low price set in Dubai. And it was true, until it wasn’t. The new, new low price of $0.0387/kWh is approximately 68 percent cheaper than the national average electricity price, according to Clean Technica. Here’s what this means for regular folks: as public utility companies begin seeking out better deals on solar projects—and then hopefully see those prices actually fulfilled in procurement—a massive savings will be passed on to consumers.

Even adjusted to account for federal tax subsidies, the Austin and Nevada prices beat that mark, coming in at less than $0.0571kWh. The way we see it, if the experts in the global solar power market couldn’t predict these early and staggeringly low prices, anything is possible for this rapidly growing industry.

Attached Files

Solar Paper is World's Thinnest Sun-Powered Charger

Solar chargers are appealing, but they can also be bulky and heavy. Not the case with Solar Paper, a new project seeking funds on Kickstarter to commercialize what sponsors claim is the thinnest and lightest solar panel for your phone or camera.

It's about as wide and tall as a big smartphone like an iPhone 6+ or Galaxy Note 4, but only 1.5 millimeters thin — that's "stick of gum" territory. It's thin enough to fit between the pages of a notebook or planner — just unfold the panels and plug in your phone to start charging. Of course, you'll want to be outside in the sun for the best results, though partial or indoor sunlight could also work — check the built-in meter to make sure your device is getting enough power.

The basic two-panel version, currently going for $69, is enough to charge a phone or other small device, but tablets and cameras might need a third or fourth panel to increase the wattage. These can be bought separately and snapped on magnetically.

Yolk, the company behind Solar Paper, was asking for $50,000 to finalize the product. It has already received over $200,000 from backers, so there's no risk the product won't be funded. Assuming all goes will in the manufacturing stage, the first chargers should ship in September.

Andhra Pradesh State to get 250 MW solar power this fiscal

The State will have an additional 250 MW energy from renewable sources by March next year if the plans of the Energy department materialise.

Works on setting up of the 1,000 MW solar park in Anantapur and other districts had commenced and solar projects with 250 MW installed capacity are set to be commissioned before the end of the current financial year. Works on the remaining 750 MW are likely to be completed by the end of the next financial year.

The works have been commissioned following the decision to promote an ultra mega solar power plant at N.P. Kunta in Anantapur to overcome power shortages in the long term.

The government had also proposed development of a 1,000 MW solar park in Kurnool district owing to the potential it offered and the bids for the project had already been invited.

“The bids will be opened by July 30, and it will be followed by entrustment of work to the prospective bidders soon,” Energy Secretary Ajay Jain told The Hindu . The two projects formed part of the government’s plans to promote 5,030 MW solar and 4,150 MW wind power projects in the next five years.

The Union Government, according to Mr. Jain who accompanied Chief Minister N. Chandrababu Naidu during the latter’s visit to Japan, had announced its willingness to dedicate the entire 1,000 MW capacity of solar plant in Kurnool district to Andhra Pradesh.

This will be the second project after the 1,000 MW Simhadri power plant to be dedicated exclusively to meet the State’s requirements.

According to Mr. Jain, the government had also directed the energy utility APGenco to explore the scope for setting up of another 500 MW renewable energy plant for tapping the existing potential in the State and efforts were under way to identify the location and mode of generation in this direction.

Solar companies will push the Philippine government to quadruple the size of an incentive scheme for suppliers of the renewable energy and to speed up project approvals, as the country grapples with precarious electricity supply.

Industry group the Philippine Solar Power Alliance (PSPA) said it would propose the steps to make it easier to develop projects worth an estimated $4 billion in the pipeline from local firms such as Aboitiz Power Corp and foreign companies like Thailand's Chow Steel Industries PCL.

Located right above the equator, the Philippines is blessed with plenty of sunlight throughout the year that could be used to help meet soaring power demand as manufacturing grows and call centre businesses boom.

But worries over the initial expense of solar projects have stymied the sector's development with many projects still at very tentative stages, hampering the country's efforts to shake its dependence on imported fossil fuels.

Under the government's current incentive programme, 500 megawatts of solar capacity will be entitled to guaranteed prices for 20 years. But the PSPA wants to extend that to around 2 gigawatts.

"We will draft an industry roadmap, which we will present to the government as the basis of our proposal which is for 2 gigawatts," said Theresa Cruz-Capellan, chief executive of SunAsia Energy Inc and president of the PSPA. The country's solar capacity currently stands at around 110 MW.

Mario Marasigan, director of the renewable energy management division of the government's energy department, said Manila would need time to assess the impact of more ambitious solar targets.

The PSPA also said getting regulatory approval such as permission to convert land into solar farms and other environmental clearance had been slow.

"We have to deal with many people in the government from local to national level to get permits," Cruz-Capellan told Reuters in an interview.

The proposals would help the Philippines follow regional neighbour Thailand, which has poured record sums of money into its solar sector.

Thailand ignites solar power investment in Southeast Asia

Come December, Thailand will have more solar power capacity than all of Southeast Asia combined as record sums of money is poured into the sector in the hopes of nurturing a new energy source to help drive the region's second-biggest economy.

Thailand has been shifting away from natural gas as once-plentiful reserves are expected to run out within a decade, forcing it to rely on imported fuel more than any other country in the region except Singapore. A plunge in solar-component costs and subsidised tariffs have also helped feed the country's solar boom.

About 1,200-1,500 megawatts of solar capacity will be connected to the grid this year, requiring as much as 90 billion baht ($2.7 billion) of investment, Pichai Tinsuntisook, chairman of the Federation of Thai Industries' renewable energy division, told Reuters.

Thailand's solar capacity will rise to 2,500-2,800 MW this year from about 1,300 MW in 2014. That is almost six times more than the capacity added last year. The new capacity, while modest compared to Japan or Germany, will turn Thailand into the first significant solar power producer in a region where the sector has barely taken off.

"Thailand has strong potential for both solar farms and rooftop solar systems," said Sopon Asawanuchit, managing director of advisory firm Confidante Capital, adding that its location in the sunny tropics is an advantage.

While the bulk of the power will come from solar farms, rooftop solar panels may have enough capacity over the next five years to supply as many as 250,000 households in urban areas, renewables analysts say.

Thailand aims to increase its solar capacity to 6,000 MW by 2036. That would account for 9 percent of total electricity generation, up from 4 percent in 2014, and be able to meet the electricity needs of up to 3 million households.

Sena is among the latest companies diversifying into the solar business as the domestic property market slows in line with a sluggish economy.

Shares in companies which aim to invest in solar power have outperformed the overall Thai stock market this year. Among them are Sena, Superblook, Gunkul Engineering and Communication and System Solution.

Despite the current boom, some investors are worried solar power may be used as an excuse for some retail punters to speculate in the stock market, the Federation of Thai Industries' Pichai said.

Yingli Supplies 240 MW of Solar Panels for Hybrid Solar Power Plants

Yingli Green Energy Holding Company Limited, one of the world's leading solar panel manufacturers, today announced that it is supplying 240 megawatts (MW) of solar panels for Latin America's two largest hybrid solar photovoltaic (PV) and concentrated solar power (CSP) power plants. Both projects, located in northern Chile, will also be equipped with 110 MW of CSP and 17.5 hours of thermal storage each.

As the power plants' sole PV supplier, Yingli is providing over 780,000 multicrystalline utility-scale YGE 72 Cell solar panels to the projects, which be installed in two phases. The first phase of panel deliveries was recently completed, and the second phase will start in August. The first power plant is expected to be operational by mid-2016.

Once complete, the PV portion of the solar power plants will occupy nearly 100,000 acres of land in total. Both projects will be connected to the national utility grid and deliver an uninterrupted power supply to commercial, industrial, and residential customers throughout Chile, offsetting approximately 385,000 tons of carbon emissions each year.

Great Wall Seeks Up to $2.7 Billion for New-Energy Cars

Great Wall Motor Co., China’s largest sport utility vehicle maker, plans to raise as much as 16.8 billion yuan ($2.7 billion) in a private share placement to fund research and development of new-energy vehicles.

Great Wall’s board approved the proposal to issue as many as 387 million A shares in Shanghai at 43.41 yuan each to fewer than 10 securities investment and management companies, the company said in a statement to the Hong Kong stock exchange.

The maker of China’s best-selling SUV model is raising funds to pay for the research and development of new-energy vehicles. Policy makers are tightening fuel standards and promoting electric vehicles in order to control pollution and reduce a reliance on imported oil.

Great Wall boosted sales in the first half by 20 percent to 415,339 units, led by the 49 percent jump in demand for its Haval and M series SUVs. Great Wall will resume trading on July 13.

Big Oil Worth $100 Billion for Solar After Biggest Plant Ordered

Solar energy developers may be able to earn $100 billion or more by selling equipment to the oil industry for extracting heavy grades of crude, the head of the company that is developing the world’s biggest solar heat plant said.

Rod MacGregor, chief executive officer of GlassPoint Solar Inc., said the oil industry’s demand for energy is growing rapidly, and solar can supply much of that power.

His company, based in Fremont, California, won a contract on Wednesday to supply 1 gigawatt of power at the Amal oilfield in Oman, where the government and Royal Dutch Shell Plc are injecting steam to extract heavy oil. The plant will be the biggest delivering heat from the sun, a landmark for both the oil and solar industries.

“Its value is way over $100 billion, but that’s just a snapshot, and it’s growing very quickly,” MacGregor said by phone. “A lot of solar companies have viewed oil and gas as an evil empire. What’s going to bring the two together is fundamental economics.”

The company will install rows of parabolic mirrors that focus the sun’s energy to heat fluid that will make steam for injecting into underground rock formations. That will reduce the viscosity of the crude and help lift more supplies to the surface.

Traditionally, fossil fuels fed the boilers that make steam for such processes, consuming energy equivalent to a 20 percent of every barrel recovered. Using solar power cuts that energy need and frees up more supplies for export.

GlassPoint’s innovation is in installing agricultural greenhouses over the fragile mirrors, protecting the units from the Middle East’s violent sandstorms.

The company is targeting deals for further large-scale sites. MacGregor said that areas where the technology could be used include western China, Madagascar, parts of Venezuela, California and the Gulf region.

“These giant deals generally take some time to mature,” he said. “We have a very healthy pipeline of giant projects. We’re in discussions with pretty much every producer of heavy oil in the world.”

Uranium

Paladin achieves record Q4

Paladin achieves record Q4

Uranium miner Paladin Energy has reported its best quarter yet for the 2015 financial year, with the miner on Thursday announcing a 340% quarter-on-quarter increase to $73.3-million in sales revenue for the three months to June 30.

The Langer Heinrich mine, in Namibia, produced 1.33-million pounds of uranium oxide (U3O8) in the quarter under review, an 8% increase on that produced in the March quarter. The March quarter results had been affected by a failure of the pre-leach thickener feed well at the plant, in February.

Production for the full year, at 5.04-million pounds U3O8, was within guidance. Paladin noted that run-of-mine stockpiles at Langer Heinrich had decreased by the end of the June quarter, with the low stockpile levels expected to remain until mid-July, when high-grade ore would be exposed in Pit H4.

The miner further pointed out that the bicarbonate recovery project (BRP) at Langer Heinrich operated well throughout the quarter, achieving 115% to 120% of design capacity in terms of both volumes processed and sodium bicarbonate recovered. Significant process optimisation took place during the quarter, which allowed the BRP to achieve 147% of its design capacity, which Paladin said could be maintained or exceeded throughout the September quarter.

This would equate to a potential direct saving of around $16-million in reagent costs. Further optimization was ultimately expected to lift the BRP performance to higher than 200% of its design capacity by December of this year, without the need for the installation of any additional equipment.

Paladin noted that the high degree of success from the BRP augured well for the ongoing success of the company’s innovation program, with the new technology acting as a key driver for further reductions in C1 costs at Langer Heinrich. C1 unit cash costs for the quarter reached $26.03/lb, which were in line with expectations. During the month of June, these costs were further improved to $24.72/lb.

Paladin expected to produce between 5-million and 5.4-million pounds U3O8 in the 2016 financial year. Meanwhile, the miner said the restart feasibility study of its Kayelekera mine, in Malawi, was nearing completion.

Precious Metals

Barrick poised to sell more gold mines

Barrick Gold Corp., nearing a deal for its Zaldivar copper mine, is likely to consider three other mines as leading candidates for sale as it works to cut the biggest debt in the gold industry.

Among the remaining non-core mining operations that Barrick would examine selling are its 50 percent stake in Australia’s Kalgoorlie mine, Canada’s Hemlo and Bald Mountain in Nevada, according to analysts and investment bankers.

The world’s largest producer of the metal has pledged to raise at least $3 billion this year to reduce its $12.9 billion debt. The Toronto-based company is in advanced discussions to sell a 50 percent stake in its Zaldivar mine in Chile with final bids submitted last week by China Molybdenum Co., BHP Billiton Ltd. and others, people familiar with the matter said last week.

While Barrick has said it only wants to sell a 50 percent stake in the mine, some of the bidders were expected to have submitted bids for the whole operation, which is valued at more than $2 billion, the people said.

If completed, Zaldivar would mark the last of three deals Barrick has pledged to complete this year. In May, the company sold a 50 percent stake in its Porgera mine in Papua New Guinea to Zijin Mining Group Co. for $298 million. That came two days after it agreed to sell its Australian Cowal mine to Evolution Mining Ltd. for $550 million.

Excluding Zaldivar, the company has made more than $2 billion in deals since its total debt peaked at $15.8 billion in 2013, the same year gold futures had their biggest annual plunge in more than three decades. The debt had ballooned after Barrick’s takeover of copper miner Equinox Minerals Ltd. in 2011.

Reducing debt will remain a priority after the Zaldivar sale, Andy Lloyd, a Barrick spokesman, said this week in an e- mail.

Amplats' half-year earnings expected to surge

Prior to publishing its half-year results next week, Anglo American Platinum (Amplats) on Monday said in a revised update to the market that a significant surge in earnings was expected for the six months to June 30.

The expected rise in earnings was attributed to an improvement in operational performance following the protected industrial action in the comparative period, an increase in sales volumes and the weakening of the rand against the US dollar.

Further, the company benefited from an after-tax gain of R1.56-billion – contributing 600c a share – through its increased estimate of the quantity of inventory based on the outcome of the physical count of in-process metals, Amplats said. While the group initially expected a 20% plus rise on headline earnings and headline earnings per share (HEPS), the JSE-listed mining company now believed headline earnings for the six months under review would increase to between R2.45-billion and R2.48-billion – a 1 461% to 1 480% jump on the prior year – with HEPS rising to 940c to 950c a share, or between 1 467% and 1 483%, compared with the corresponding period last year.

Amplats reported headline earnings and HEPS of R157-million and 60c apiece respectively in the first six months of 2014. Amplats’ revised basic earnings for the period were expected to increase to between R2.4-billion and R2.48-billion for the six months to June 30, equating to a 459% to 478% rise on the R429-million in the corresponding period the year before.

Earnings per share (EPS) during the period under review would likely rise to between 915c and 945c, or between 458% and 476%, compared with the EPS of 164c in the comparative period the year before. Amplats would publish its half-year results on July 20.

Base Metals

Gresik copper smelter in Indonesia shut due to technical issues

Image Source: MMCA spokesman at majority owner Mitsubishi Materials Corp said on Thursday that Indonesian copper smelter Gresik has shut down due to a technical problem and it is not clear when the smelter will reopen

Mr Takuya Kitamura said that the shutdown at the smelter was due to a broken pipe system, but he was not able to give a timetable for how long the outage would last. Mr Kitamura was not able to say whether the company was looking for alternatives for themselves or their customers for sourcing replacement supply.

But two sources with knowledge of the shutdown said the plant has already been shut for several weeks and that they expected the closure to last for at least one more.

Mitsubishi Materials owns 60.5 percent of the operator of the facility, PT Smelting. The Indonesian unit of U.S.-based Freeport-McMoRan Inc holds a 25 percent stake. Other stakeholders in PT Smelting are Mitsubishi Corp with 9.5 percent, and Nippon Mining and Metals, a unit of Nippon Mining Holdings, with 5 percent. The Gresik smelter produced 230,000 tonnes of refined copper last year running at about 75 percent of its capacity.

A 200,000 tonnes-a-year smelter started production in May and its production is expected to rise gradually in the coming months.

Yang expects refined copper production to rise further in July due to the new smelter and as another large smelter completed maintenance this week.

New capacity continued to drive up production of primary aluminium to a fresh record of 2.76 million tonnes in June, up 3.3 percent from May, the data showed.

In the first half, aluminium output jumped 11.7 percent from a year ago to 15.6 million tonnes.

More than 2 million tonnes of aluminium capacity started production in the first half, said Xu Hongping, analyst at China Merchants Futures. Another 3 million tonnes of new capacity is likely to come onstream in the second half, she said.

Production costs to many aluminium smelters had fallen due to weak prices of raw material alumina and coal, offsetting weak domestic prices AL-A00-CCNMM, Xu said.

Xu expects aluminium production to rise further in the coming months.

Production of refined zinc hit a record in June, while lead, tin and nickel all rose to the highest levels this year.

Zambia's mining industry says new tax rules will scare away investors

Zambia's mining industry said on Wednesday that an increase in corporate tax to 35 percent and other new tax rules will scare away investors and discourage processing to add value, and called for them to be scrapped.

Last month Zambia, Africa's No.2 copper producer, approved a plan to increase the corporate income tax rate on mineral processing to 35 percent from 30 percent, and it became effective this month, bringing it in line with the rate charged to non-mining companies.

Global copper mine production to grow 6% annually until 2018: ICSG

Global copper mine production capacity until 2018 is expected to grow at an average annual rate of around 6% to reach 27.5 million mt/year in 2018, data released Tuesday by the International Copper Study Group showed.

Concentrate production capacity will represent 84% of the growth (4.8 million mt,) with solvent-extraction/electrowinning production capacity representing 16% (900,000 mt), the Lisbon-based research group said in a biannual report.

Compared with a previous estimate published in January, anticipated annual mine production capacity for 2017 and 2018 was revised down around 330,000 mt and 140,000 mt, respectively, owing mainly to continued delays for many projects, ICSG analysts said.

During the 2015-2018 period, copper in-concentrate capacity is expected to increase by 6.5%/year to reach 21.8 million mt/year in 2018, while solvent-extraction/electrowinning capacity is expected to increase at a slower rate of 4.4%/year to reach 5.7 million mt/year in 2018.

"Peru is projected to account for 26% of the additional capacity from new mine projects and expansions through 2018, followed by Zambia, Mexico, Mongolia, China and the Democratic Republic of the Congo," the ICSG said. "Together these six countries will represent 66% of the world growth."

Projects are also being planned in countries that currently do not mine copper, including Afghanistan, Ecuador, Ethiopia, Fiji, Greece, Israel, Panama, Sudan and Thailand, the research group noted.

"By 2018, total expected copper production capacity from projects starting in these new copper mining countries could reach 150,000 mt/year, and capacity could continue to increase well above 1 million mt/year if projects planned beyond 2018 in these countries are developed," ICSG analysts said. Concurrently, production from countries that started mining copper in the last decade is expected to increase to 550,000 mt/year by 2018 from 4,000 mt/year in 2003.

Annual copper smelter capacity growth is projected to lag behind the growth in concentrate capacity, growing an average 3%/year to reach 22.5 million mt/year in 2018, an increase of 2.6 million mt (13%) from that in 2014.

Sandfire Resources to build $40m solar power station

Sandfire will start the construction of its solar power station in July. Photo: Dominic Lorrimer

Construction of a state-of-the-art solar power station at a copper mine in Western Australia will begin later in July.

Sandfire Resources says the $40 million project at the DeGrussa copper mine 900km northeast of Perth will be the largest integrated off-grid solar and battery storage facility in Australia.

The project, expected to be up and running in 2017, is getting up to $15 million in funding from the federal government's Clean Energy Finance Corporation and $20.9 million from the Australian Renewable Energy Agency.

Alcoa shines a light on China's "fake semis" trade

China exported 2.5 million tonnes of unwrought aluminium and aluminium products in the first half of this year. That was 35 percent, or 650,000 tonnes, higher than the same period of 2014.

Most of what leaves China is in the form of semi-manufactured products. The rest is largely aluminium alloy with a very small amount in the form of primary metal, the stuff that's traded on the London Metal Exchange.

China has long penalised exports of primary metal with a 15 percent export duty. Exports of "semis" are not only exempt from the tax but qualify for a refund of value added tax (VAT). The policy is intended both to reward producers for investing in value-add product capacity and to prevent the export of an energy-intensive commodity from a country short of energy.

Because hidden somewhere in that flow of products out of China is a stream of "fake semis", metal that has been minimally transformed with the sole purpose of gaming the export tax differentials.

But with aluminium prices once again pressuring producer margins, U.S producer Alcoa has decided to speak out publicly about the "fake semis" trade.

China's exports of "fake semis" are "the major driver" of lower aluminium prices, according to Klaus Kleinfeld, Alcoa chairman and CEO, talking to analysts on the company's Q2 financials conference call.

What irks Alcoa and other non-Chinese producers is the fact that they have been steadily shuttering capacity only to see the resulting supply-demand deficit filled by Chinese exports.

The company has revised upwards its estimate of global surplus this year by 400,000 tonnes to 760,000 tonnes.

But the headline figure masks two very different market dynamics. In the world outside China Alcoa forecasts a deficit of 1.465 million tonnes. In China itself, though, the outlook is for a surplus of 2.227 million tonnes.

It is, after all, an illegal trade, "stealing money away from the Chinese people," as Kleinfeld bluntly expressed it.

The key distribution channels appear to be other Asian countries such as Vietnam and Malaysia with analysts poring over import and export data for evidence that in part they are no more than transhipment points for remelted Chinese metal that will ultimately enter the primary supply chain elsewhere.

Unless that changes, what leaves China is going to be a growing problem for every other producer. "Fake semis" may be a particularly egregious development but they are only the illegal tip of a bigger problem for the rest of the world.

Indian aluminium industry demands import duty hike

PTI reported that to protect the interest of homegrown companies from rising imports of aluminium metal and its scrap, the aluminium industry has demanded that the Centre increase import duty on these products.

As per statistics of Aluminium Association of India, Indian Aluminium Industry has seen a huge surge in imports in recent years from 8.81 lakh tonne in the year 2010-11 to 15.63 lakh tonne in 2014-15 financial year primarily from Middle East and China. Similarly, the import of aluminium waste and scrap has increased at a compound annual growth rate of 16 % in the same period.

Vice President, Community Relations of Balco (Bharat Aluminium Company), Mr BK Shrivastav told PTI "The Indian Aluminium Industry is at a critical phase where it requires support from the government to maintain not only its current viability but also protect its growth plans that have significant economy contributions and benefits.”

He told "Indian aluminium industry is facing big challenge from increasing import of primary aluminium metal and aluminium scrap. The rising imports are endangering the very basis of these large investments and their viability. Sale of domestic producers in the country is going down as imports are on the rise.”

There are four primary aluminium producers in the country — Balco, Nalco, Hindalco & Vedanta Aluminium.

LME tin spreads tighten but is there any shortage?

Tin spreads on the London Metal Exchange (LME) have flared into backwardation this week. The benchmark cash-to-three-months period CMSN0-3 ended Wednesday valued at $54 per tonne backwardation. That's the highest cash premium since the fourth quarter of last year.

As ever with tin, one of the less liquid base metal contracts traded on the LME, the flip from comfortable contango to nearby tightness has happened at accelerated speed. But is the market really tight?

The outright price touched a six-year low of $13,365 at the end of June and is currently languishing around the $14,000 level.

Sure, tin has been swept up in the general panic emanating from the Chinese stocks crash, but the soldering metal was already the worst performer among the core LME metals even before the tumultuous events of the last two weeks.

That's largely down to a collective negative reassessment of this market's dynamics after the unexpected emergence of a major new supply source in the shape of Myanmar.

There was a certain inevitability about some sort of spreads reaction to the steady downtrend in LME stocks of tin. Headline stocks of 7,080 tonnes have fallen by 5,055 tonnes, or 42 percent, so far this year.

More significantly in terms of shorts looking to roll positions, the amount of live tonnage, excluding that earmarked for physical drawdown, is just 6,025 tonnes.

Such a depleted level of stocks has been associated with spread tightness in the past. Indeed, given such a low physical liquidity pool, it is surprising that there are no significant cash-date longs showing up in the LME's market positioning reports.

Which is presumably why there is no squeeze at the very front end of the curve. Rather, the tightness is focused on the August-September spread, valued at $30 backwardation at Thursday's close.

The positioning landscape in August <0#LME-FBR> looks more interesting with one major long holding positions equivalent to between 30 and 40 percent of open interest, or around 2,800-3,800 tonnes. There are six shorts on the same Aug. 19 prompt date.

It looks as if one or more of those shorts is preemptively on the move, one eye no doubt on that stocks downtrend. And quite possibly with the other eye on Indonesia, the world's largest and most unpredictable exporter of tin.

Indonesian producers are supposed to be limiting exports in a bid to support prices, but you'd be forgiven if you hadn't noticed.

Exports are currently running at a strong pace. June's tally of 8,337 tonnes was the highest so far this year and cumulative exports of 39,356 tonnes are down by only a couple of thousand tonnes on the first half of 2014.

The difference can largely be explained by this year's clamp down on exports of solder and "products", all part and parcel of the Indonesian authorities' ongoing campaign to instil some order on the notoriously chaotic smaller producers clustered on the islands of Bangka and Belitung.

Exports of tin ingot are actually up on year-earlier levels, suggesting the most recent price-support scheme by the country's producers is proving as ineffective as so many previous attempts to bully up prices.

A new turn of the screw by Jakarta might do more to limit exports than any voluntary restraint.

From the start of August the newest batch of official export rules will extend to checking actual mining licences and mining practices, a level of scrutiny that many smaller operators may not pass.

No joy for EU steelmakers from rising demand as imports bite - Eurofer

European economic growth is expected to power a 1.5 percent rise in EU steel demand this year but local producers will see little benefit due to rising imports, steel body Eurofer said on Thursday.

Overall steel imports into the European Union are expected to rise 5 percent, hurting domestic mills.

For 2016, Eurofer, whose members include top global steelmaker ArcelorMittal, ThyssenKrupp and Voestalpine, said it expects apparent steel demand growth of 1.9 percent.

"EU steel imports are again rising significantly, thereby fuelling price competition and eroding margins. Massive and increasing overcapacity in China in an era of slowing growth is the root cause of this," Eurofer director-general Axel Eggert said in a statement.

"As long as Chinese mills continue to offload their products rather than cut production, we foresee the continuation of difficult market conditions," he added.

Eurofer estimates that Chinese exports to the EU rose 49 percent year-on-year over the first five months of 2015.

The EU has this year taken some measures to protect domestic steelmakers, including its imposition in March of anti-dumping duties on imports of cold-rolled flat stainless steel from China and Taiwan.

Protectionist measures have also been imposed in countries including Indonesia, India, Turkey, Mexico and Iran as China continues to sell record levels of cut-price steel to overseas markets.

Attached Files

POSCO putting Odisha steel plant project on hold

Image Source: WikimediaNikkei reported that South Korean steel giant Posco will freeze a major blast furnace project in the eastern Indian state of Odisha, faced with opposition from residents and slim prospects of obtaining the interest it wanted.

The project won approval from the Indian government in 2011. Posco sought an annual output of 12 million tons. There were also plans to build such facilities as a port. But the project has drawn the ire of locals worried about the environmental impact. And the company is unlikely to gain preferential rights to an interest of 600 million tons of iron ore for 30 years. In these circumstances, the company is likely to give up altogether on the plan, a Posco official said.

Posco has pledged to halve its domestic operations and cut overseas units by 30 percent. It will aggressively exit non core areas that aren’t competitive, Chief Executive Officer Kwon Oh Joon said at a briefing in Seoul on Wednesday, without identifying which parts of the company.

Posco is returning to its roots and focusing on improving the quality of the steel it produces as a flood of cheap exports from China pushes prices to the lowest since at least 2003.

Iowa utility agrees to phase out seven coal plants in settlement

Iowa utility agrees to phase out seven coal plants in settlement

The Sierra Club said on Wednesday that an Iowa utility has agreed to phase out seven coals plants in a settlement with the U.S. Justice Department and Environmental Protection Agency, the state and the environmental group.

Alliant Energy Corp subsidiary Interstate Power and Light agreed to install pollution controls at two of its largest coal-fired power plants, and either retire or convert the five remaining plants to natural gas.

Interstate also agreed to pay a civil penalty of $1.1 million to resolve claims it violated the U.S. Clean Air Act.

The Sierra Club joined the lawsuit along with the state of Iowa, the EPA and Justice Department as co-plaintiffs.

"The days of coal-fired power plants putting Americans at risk are coming to an end," said Michael Brune, Sierra Club's executive director. "In Iowa and across the country, people are demanding clean air and clean water and they are winning."

The group's Beyond Coal campaign has focused on legal settlements to target some of the country's oldest and dirtiest coal-fired plants. With the latest agreement, Sierra Club said it has helped shuttered 200 coal plants.

Alliant will spend about $620 million to install pollution controls and another $6 million on environmental mitigation projects, including solar energy installations, replacement of coal-fired boilers, and installation of anaerobic digesters, which capture greenhouse gases from livestock manure.

Cynthia Giles, assistant administrator for the EPA's Office of Enforcement, said the settlement also reflects the agency's focus on cracking down on the country's biggest polluters.

Coal miner Walter Energy files for bankruptcy

Coal miner Walter Energy Inc filed for bankruptcy protection on Wednesday after struggling with a steep fall in coal prices since 2011.

The Birmingham, Alabama-based company said its U.S. units have filed for a prepackaged Chapter 11 bankruptcy protection, but its other operations including those in Canada and the UK are not included in the filings.

The company said terms of the restructuring assume senior lenders will convert all of their debt into equity.

Rio Tinto shows 2nd qtr iron ore boost but cuts shipping guidance

Rio Tinto on Thursday posted a sharp rise in second quarter iron ore output from a year ago as it battled to maintain its top market position in China, even as selling prices deteriorate and bad weather disrupted operations.

But the world's second-biggest iron ore miner was forced to trim it full year guidance for ore shipments by nearly 3 percent to around 340 million tonnes after two cyclones swept through its mines and ports in March and May.

Second quarter iron ore output was still 9 percent higher than the same quarter of 2014 at 79.7 million tonnes and 7 percent above the first quarter of 2015, data released by the Anglo-Australian company showed.

The result was as in line with analysts expectations of around 80 million tonnes, including Rio Tinto's partners in some mines.

"We have maintained our emphasis on efficiency and protecting returns, which is reflected in this solid production performance, "Chief Executive Sam Walsh said in a statement.

Iron ore .IO62-CNI=SI staged a modest recovery in June but tumbled to a decade low near $44 a tonne last week, as inventories at Chinese ports swelled and demand from Chinese steel mills waned.

Amid lower margins, Rio and rival BHP Billiton have been producing at full tilt to boost profits, but are facing a fightback from Brazil's Vale , the world's biggest producer.

The fight for China's market has turned the global seabourne iron ore trade into an oligarchy, according to Citigroup analyst Ivan Szpakowski, with the highest market concentration of any major commodity.

Vale and BHP are also expected to show sharp lifts in quarterly production in coming days.

Rio said it lost about 7 million tonnes of shipping capacity at its ports due to the severe weather when tropical cyclones Olwyn and Quang hit the Pilbara iron ore belt, where most of Australia's ore is mined.

Heavy inland rains also hindered trucking operations, resulting in lost production at the mines and impacting the ability to operate rail haul lines according to scheudle, it said.

Rio's forecast for 340 million tonnes in full-year shipments would still be up 15 percent on 2014.

China H1 coal industry FAI down 12.8pct

China’s fixed-asset investment (FAI) in coal mining and washing industry stood at 168.6 billion yuan ($27.55 billion) during the first half of the year, down 12.8% year on year, showed data from the National Bureau of Statistics (NBS) on July 15.

India’s coal imports jump 23pct in 2Q15

Image Source: Orissa PostPTI reported that India’s imports of thermal coal jumped 23% to just under 24 million t at 12 major ports in 2Q15. Metallurgical coal volumes remained steady at 8.17 million t.

The rise in imports comes even at India’s federal government is pushing state-owned coal miner, Coal India (CIL), to boost production to around 1 billion t by 2019 to help meet the country’s growing demand for electricity. In the last financial year, CIL recorded production of 494.23 million t and has been set a target of 550 million t in the currest fiscal.

Iron ore’s plunge has Mount Gibson warning of mine closures

The collapse in iron ore prices to near the lowest level since at least 2009 risks forcing Mount Gibson Iron to shutter both its operating Australian mines.

Mount Gibson’s realized price for iron ore fines more than halved in the past year and it’s now contemplating the early closure of its Extension Hill mine, the Perth-based producer said Wednesday in a statement.

The Koolan Island mine, located off the coast of Western Australia and engulfed by the Indian Ocean after the collapse of part of a 75-meter wide seawall in November, is already scheduled to be placed on care and maintenance by the end of the year, it said.

The volatility prompted an “ongoing assessment of possible early closure of the Extension Hill mine in the event that price conditions deteriorate,” Mount Gibson said in the statement. Shuttering the site ahead of schedule would cost about A$45 million ($33 million) as at June 30, it said.

Insurers have offered conditional confirmation that Mount Gibson will be covered for the failure of the Koolan Island mine subject to further inquiries, the company said. Mount Gibson rose 5.3% to 20 Australian cents at 10:06 a.m. in Sydney trading.

Iron ore with 62% content delivered to Qingdao fell 0.5% to $50.06 a dry ton on Tuesday, the first drop in four days, according to data from Metal Bulletin Ltd. Prices reached $44.59 on Wednesday, the lowest in data going back to May 2009.

Mount Gibson’s realized price in the three months to June 30 declined 54% to $38 a dry metric ton from $83 a ton a year earlier.

Benchmark prices will probably tumble below $40 a ton this half on a “looming wave of supply,” as the largest producers continue expansions, according to Jeremy Sussman an analyst at Clarksons Platou Securities Inc.

Shares of Gerdau sink as investors shun reorganization plan

Shares of Brazil's Gerdau SA plunged the most in almost four months on Tuesday after the Americas' largest steelmaking group announced plans to spend 1.986 billion reais ($633 million) buying out four units as part of a broad reorganization program.

Under the plan, Gerdau will buy the remaining stakes it does not yet own in Gerdau Aços Longos SA, Gerdau Açominas SA, Gerdau Aços Especiais SA and Gerdau América Latina Participações SA. South American operations will be merged into a single unit, with the Brazilian unit absorbing Gerdau's iron ore business.

While the move underpins efforts by Chief Executive Officer André Gerdau-Johannpeter to mitigate the impact of Brazil's worst economic downturn in 25 years on earnings and output, investors lashed out at the price being paid for the remaining stakes, which range between 4 percent and 5 percent, amid plunging sales and rising unwanted inventory.

This is "an expensive transaction from basically every angle, and the timing was unfortunate," said Leonardo Correa, a senior mining and steel analyst with Banco BTG Pactual SA. He cut his price target on Gerdau to 9 reais from 12.50 reais on the news.

Preferred shares of Gerdau, the company's most widely traded class of stock, sank as much as 7.4 percent to 6.51 reais, nearing their lowest level in 10 years. Metalúrgica Gerdau SA, the investment holding company that controls Gerdau, shed as much as 11 percent.

Gerdau will disburse 339 million reais in cash for the stakes, with the remainder being paid with 206 million reais worth of stock, 802 million reais worth of shares in an asset-backed security fund and 639 million reais in additional, annual installments between 2016 and 2022.

The reorganization is "part of necessary actions to adapt Gerdau to a current scenario demanding more competitiveness," the filing quoted Chief Financial Officer Andre Pires as saying. The company will formally present the new structure in its third-quarter earnings report.

A sales trading desk note by Bradesco BBI suggested that the buyout of the four units might have been planned as a way to reverse prior steps in which Gerdau sought to create tax-deductible goodwill. Some of those actions are currently being contested by tax authorities.

Efforts to contact Gerdau to explain the move were unsuccessful, the Bradesco BBI note added.

Under the reorganization plan, mills in Mexico and the Caribbean will also be gobbled up by Gerdau's increasingly relevant North America unit, which is starting to reap the benefits of a recovering economy in the United States, the filing added.

China June coal output falls nearly 5 percent -stats bureau

China churned out 327 million tonnes of coal in June, down 4.9 percent from the same period last year, despite rising seasonal power demand, with major producers slashing output to minimise losses, data from the country's statistics bureau showed.

Production in the first six months reached 1.789 billion tonnes, down 5.8 percent compared with the same period in 2014, the National Bureau of Statistics said.

Coking coal production in June also fell 6.9 percent on the year to 38.38 million tonnes.

Beijing has been trying to ease its dependence on coal and encourage new sources of energy as part of its war on pollution, but it is the economic downturn that has had the biggest impact on the sector, with supply outstripping demand and prices down more than 20 percent so far this year.

China has been urging producers to curb coal output in a bid to support prices, but new capacity continues to go into operation, with local governments remaining reluctant to take on a sector that employs 5.9 million people and provides huge amounts of revenue.

So far, the arrival of the summer - usually accompanied by a surge in power consumption as air conditioners are switched on - appears to have had some impact on coal demand, but demand remains weak compared to last year.

Coal imports rose 16.5 percent on the month in June, but they were still down 34 percent on the year.

According to Helen Lau, analyst with Argonaut Securities in Hong Kong, many domestic miners in the provinces of Inner Mongolia and Shanxi have cut back production because prices at Chinese ports are now even lower than those on the spot market. The drop in supplies caused the month-on-month increase in import volumes.

"But the Chinese coal price has not gone up at all, meaning that even though imports of coal increased a little, overall demand remains very, very weak," she said.

Power generation volumes reached 474.5 billion kilowatt-hours (kWh) in June, up 0.6 percent compared to the same period of last year, but thermal power output was actually down 5.8 percent, with grid companies taking advantage of the 16.4 percent increase in hydropower over the period, which eased their reliance on coal-fired plants.

Industrial demand for coal has also remained low, with cement production down 5.8 percent in June and crude steel output also falling 0.8 percent compared to last year.

Spot coal prices in the port of Qinhuangdao SH-QHA-TRMCOAL have remained unchanged at 415 yuan ($66.84) per tonne since early June. The Shenhua Group, China's top coal producer, also said that it would keep prices unchanged over July in the face of weak demand.

China June crude steel output dips on year as demand falters

China's crude steel output dropped 0.8 percent in June from a year earlier, government data showed on Wednesday, with demand hit by sputtering economic growth and a property slowdown in the world's top producer.

But average daily output reached 2.298 million tonnes last month, the highest since June last year, according to data from the National Bureau of Statistics.

"The daily output was a bit surprising. Steel mills are desperate to protect their market share and maintain cash flow despite deepening losses," said Qiu Yuecheng, analyst with steel trading platform Xiben New Line E-Commerce in Shanghai.

"However, the biggest concern for steel mills is steel demand is declining this year because of the slowing economy, and some will have to accelerate cuts in steel output in July."

Total steel output declined 1.3 percent to 409.97 million tonnes for the first half of 2015 compared with the same period a year ago, according to the data from the statistics bureau.

Chinese steel prices are at their lowest in more than 20 years as the slowing economy cuts into demand for a range of commodities including iron ore and steel, threatening the survival of small steel mills in the country.

More steel mills have planned to schedule maintenance to curb production and reduce losses, and output is expected to fall in July and August as demand dips further as construction activity slows over the summer.

Large steelmakers' losses in their core business more than doubled for January-May from a year earlier, as the apparent consumption of crude steel dropped 5.1 percent for the first five months from a year before, more than a 3.3-percent decline over the same period in 2014.

Gas eats coal?

The Wall Street Journal reported that State regulators are descending on Washington Tuesday to make last-minute pleas for changes in the Obama administration’s sweeping new rules for power-plant emissions, which will determine the direction of utility investments for decades to come and could affect the price of electricity.

California and several East Coast states want the Environmental Protection Agency to respect the steps they have already taken to cut carbon pollution in their regions and hold other states to higher standards by not easing proposed emission targets.

Mr Mary Nichols, chairman of the California Air Resources Board, said that “We want a strong rule. There are not quite as many viewpoints as states but it’s pretty close.”

Other states, including Tennessee, Ohio and Nevada, say the pollution targets put forth by the EPA are so onerous they threaten to close power plants and cost consumers substantially more to keep the lights on.

At least 5 governors have threatened not to comply with the new pollution rules, including those of Texas, Louisiana, Oklahoma, Indiana and Wisconsin.

According to spokesman Mr Tom Reynolds, the EPA has received more than four million comments so far on what the Obama administration is calling its Clean Power Plan, the most in the agency’s history. Once finalized in August, it is expected to face a barrage of legal challenges. In the meantime, some Republicans and coal-state Democrats have been pushing legislation to delay the rule’s compliance deadlines until all the litigation is complete.

Attached Files

Brazil's Vale starts replacing higher-cost production

Vale's head of iron-ore said on Monday the Brazilian miner is replacing 25-million tonnes per year of higher-cost iron-ore production with new, cheaper tonnes, which should lower Vale's costs as it battles a slump in the price of iron-ore.

Despite removing higher-cost production, Vale is maintaining its 2015 output target of 340-million tonnes, executive Peter Poppinga said on the sidelines of a steel conference in Sao Paulo. "That is our target. ... We will try to reach 340-million tonnes," he told reporters.

The news drove Vale's preferred shares, the company's most traded stock, up 5%. Analysts at Citi said the comments indicated a potential upside to Vale's results and lower overall production costs. "Lower-cost mines are exceeding estimated production allowing for high-cost closures without reducing targets," Citi analysts Alexander Hacking and Thiago Ojea said in a note.

The market was wrong, however, to interpret Vale's move as reducing supply in order to balance the iron ore market, which touched an all-time spot price low of $44.10/t last week, analysts at Banco BTG Pactual SA said. "Vale is not cutting its volumes guidance... so essentially there is no supply and demand impact,"

The 25-million tonnes being substituted are from the south system and "a little" from the southeast system in Minas Gerais, as well as from third parties, Poppinga said. The company later said in a securities filing that the higher-cost production being replaced was between 25-million and 30-million tonnes per year of high-silica iron-ore.

China June coal imports jump 16.5% on month to 16.6 million mt

China's coal imports, including lignite, thermal and metallurgical coal, totaled 16.6 million mt in June, up 16.5% from May, according to preliminary data released Monday by the General Administration of Customs.

"Coal trade data showed a positive reversal with imports picking up in June. They have been on a steady decline since hitting a high of 35Mt [million mt] in early 2014," ANZ analysts wrote in a note to clients on Monday.

"Imports have also found support from a widening spread between Australian Newcastle and Chinese domestic prices which continues to favor imports," they added.

Over January-June, the country imported a total of about 99.87 million mt of coal, down 37.5% year on year, with the total value of the imports nearly halving to $6.37 billion, the data showed.

Over January to June, China exported about 2.34 million mt of coal, down about 26% from the same period last year, with the total value of exports slumping about 38% year on year to about $248.10 million.

Chinese steel exports in H1 crosses 50 million tonne mark

According to statistics from the General Administration of Customs, China exported 8.89 million tonnes of steel in June 2015, an increase of 1.82 million tonnes or 25.7 percent year on year, and a decrease of 0.31 million tonnes from May volume.

China iron ore imports go into reverse, new normal...RTZ

Iron ore imports by China shrank in the first six months of the year, highlighting weakness in demand in the world’s largest buyer as mills sold a record amount of production overseas amid a domestic glut.

Inbound cargoes of iron ore totaled 452.9 million metric tons between January and June, 0.9 percent lower than the same period a year earlier, according to customs agency figures released on Monday. Overseas sales of steel products surged 28 percent to 52.4 million tons in the six months, the agency said.

The stagnating trade in iron ore and simultaneous jump in steel-product exports show the extent of the slowdown in China’s steel industry, which is grappling with a property slump, overcapacity and losses. Benchmark iron ore prices collapsed last week to the lowest level since at least 2009, while steel rebar sank to a multiyear low in China. Rio Tinto Group said on Monday that iron ore had declined to a so-called new-normal level, which may persist through to 2020.

“China’s iron ore imports shrank in the first half, indicating that the country’s steel consumption obviously peaked last year,” Xu Xiangchun, chief analyst at Mysteel Research, said by phone from Beijing on Monday. “Mills won’t be able to sustain losses at the current level and will gradually reduce production, and reduce their need for iron ore.”

In June, iron ore imports were 74.96 million tons compared with 70.87 million tons in May, the agency said. Steel-product exports were 8.89 million tons in June from 9.2 million tons the month before, according to the agency.

While iron ore market conditions have changed, fundamentals remain robust, Michael Gollschewski, managing director of Rio’s Pilbara mines, said in a presentation on Monday. The London- based company, Australia’s largest shipper, declined to offer precise figures or define its “new normal” closely.

China’s Jun coal imports from Gladstone hit one-yr high

China’s Jun coal imports from Gladstone hit one-yr highChina’s coal imports from Gladstone port in the Australian state of Queensland doubled from May to a one-year high of 1.48 million tonnes in June, Gladstone Ports Corp. said on July 8.

In the fiscal year ended June 30, China imported 12.93 million tonnes of coal from Gladstone port, down 31.4% year on year from 18.86 million tonnes of coal sent to China in fiscal 2013-2014.

India was the destination for 13.49 million tonnes of Gladstone’s coal exports in the June-ended fiscal year, up 9.4% from 12.33 million tonnes in the preceding fiscal year.

Last month’s coal shipments to India were the highest recorded since Platts started tracking Gladstone coal exports data in July 2013, and the previous monthly record was 1.44 million tonnes in May 2014.

Japan maintained its offtake of coal exports from Gladstone port at 22.58 million tonnes in the fiscal year ended June, compared with 22.25 million tonnes in fiscal 2013-2014, with June imports at 2.01 million tonnes, down from 2.42 million tonnes in May.

South Korea received 10.35 million tonnes of coal exports from Gladstone coal shippers in the June-ended fiscal year, up 10.8% year on year; while Taiwan imported 2.99 million tonnes in fiscal 2014-2015, down 2% from 3.06 million tonnes a year earlier.

Peabody Energy to sell Wilkie Creek mine

Peabody Energy to sell Wilkie Creek mine

Peabody Energy has entered into a sale and purchase agreement with Sekitan Resources, a wholly owned subsidiary of Exergen Pty, to sell its Wilkie Creek mine and various associated assets in Queensland’s Surat Basin.

This transaction will be worth up to US$75 million and is expected to close in 3Q15, subject to meeting certain conditions.

Wilkie Creek ceased operations in 2013. The transaction will release certain guarantees in place for reclamation activities.

South African steel industry is melting down

The bedrock steel industry in South Africa is suffering a meltdown. The country’s second-largest producer, Evraz Highveld Steel & Vanadium, has only days to go before important deadlines for its business rescue run out. Along with Evraz Highveld’s woes, shares in ArcelorMittal SA slid more than 7% last week, taking the stock to its lowest level since February 2002. The country’s largest steel maker recovered fully the next day, but it has lost nearly 53% of its value since January, and 84% of value since September 2011.

Mr Paolo Trinchero, CEO of the South African Institute of Steel Construction, says the domestic steel industry is under severe pressure. He said "There is not sufficient market demand for the industry at present. Gross domestic product growth and steel growth are directly proportional. If the GDP growth is below 2%, steel consumption growth is negative.”

He said "From a steel industry perspective failure of the group would remove domestic beneficiation capacity from the economy, and would open up import and trading channels for Highveld’s unique products. These would be very difficult to recover in future.”

He added "From a general economy perspective we could see massive job losses, possibly permanently harming the Emalahleni (formerly Witbank) community. Reduced steel and vanadium exports would also harm our balance of payments."

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China June coal imports fall 34 pct on year

China's coal imports slumped 33.7 percent in June from a year earlier to 16.6 million tonnes, as rising summer power use failed to drive a recovery in sluggish demand, customs data showed on Monday.

Imports rose 16.5 percent on a month earlier as power plants began to rebuild stockpiles ahead of the summer consumption peak, but first-half imports were still down 37.5 percent at 99.9 million tonnes, according to figures from the General Administration of Customs.

With coal in plentiful supply, China has been urging local producers to scale back operations and has imposed strict quality restrictions on imported coal that have seen deliveries delayed and even turned away.

The Minerals Council of Australia said early this month that Australian cargoes were being unfairly rejected at Chinese ports due to the quality restrictions.

China's Ministry of Commerce told Reuters in a faxed statement that coal was a commodity covered by the free trade agreement between the two countries and that Beijing had not imposed any import restrictions.

"The rejection of any Australian cargoes at Chinese ports as a result of quality problems is an issue for the inspection and quarantine authorities," it said.

"Essentially, the decline is caused by falling demand, and the tougher regulations have only made it more difficult to import coals of lower quality from some producers like Indonesia," said Zhang Xiaojin, analyst with Everbright Futures.

Attached Files

US 2015 coal production at lowest level since 1987 - EIA

Coal analyst for the Energy Information Administration said that US coal production is expected to total an estimated 921.5 million st in 2015, down 7.5% from 2014 and the lowest total since 1987.

Production totals could get pulled down further as a mild summer and continued low natural gas prices weaken domestic coal demand, said Mr Elias Johnson, who co-authored the Short-Term Energy Outlook for July.

If demand doesnt really rebound because of a warm summer, we could see consumption go even lower and that could lead to production going down, Johnson said. Well see what the summer does.

According to the EIA, production is expected to drop in each of the three coal producing regions. The Appalachian region will drop to 237.5 million st, down 12.1% from 2014, the Interior region will drop to 182.2 million st, down 2.7%, and the West will drop to 501.8 million st, down 6.9%. Coal exports also are expected to drop to 87.4 million st, down 10.2% from 2014. In 2016, the EIA projects exports will total 88.2 million st.

The EIA also projects coal consumption for electricity generation will decline to 794.8 million st, down 6.6% from 851.4 million st in 2014. In 2016, the agency estimates electric power consumption will total 805 million st, up 1.3% from this year.

Mr Johnson said that factors behind the drop in consumption include low natural gas prices and less demand due to a mild winter. A mild summer could bring down those totals further.

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